Condensed Interim Financial Statements For the Second Half Year (“2H2023”) and Full Year (“FY2023”) Ended 30 June 2023

Profit or Loss

Balance Sheet

Review of Performance

FY2023 vs FY2022

Statement of Comprehensive Income

Revenue

Business Segments

Revenue decreased by approximately $3.4 million or 10.2%, from approximately $34.1 million in FY2022 to approximately $30.7 million in FY2023, mainly due to decrease in sales from Modern Trade and General Trade, offset by an increase in sales from Food Services segment. Revenue for Others segment was relatively unchanged.

Revenue from the Modern Trade segment decreased by approximately $0.9 million or 10.1%, from approximately $9.0 million in FY2022 to approximately $8.1 million in FY2023, mainly due to muted consumer demand amidst increased product varieties in the market.

Revenue from the General Trade segment decreased by approximately $3.7 million or 24.1%, from approximately $15.4 million in FY2022 to approximately $11.7 million in FY2023, mainly due to slow product offtake because of fierce market competition and weaker consumers' spending power in Malaysia.

Revenue from the Food Services segment increased by approximately $1.2 million or 20.2%, from approximately $6.2 million in FY2022 to approximately $7.4 million in FY2023, mainly due to higher demand for the Group’s products as a result of the lifting of COVID-19 restrictions that allowed operators in this segment to resume their capacities.

Revenue from the Others segment was relatively unchanged at approximately $3.5 million for both FY2022 and FY2023.

Geographical information

Revenue from the Singapore market decreased by approximately $0.7 million or 2.8%, from approximately $23.7 million in FY2022 to approximately $23.0 million in FY2023, mainly due to lower sales to Modern Trade customers, offset by an increase in sales from customers in the Food Services segment.

Revenue from the Malaysia market decreased by approximately $3.2 million or 36.6%, from approximately $8.7 million in FY2022 to approximately $5.5 million in FY2023, mainly due to slow product offtake from customers in the General Trade segment.

Revenue from Others segment increased by approximately $0.3 million or 20.7%, from approximately $1.8 million in FY2022 to approximately $2.1 million in FY2023, mainly due to sales generated by the Philippines subsidiary to various new customers during the financial year.

Cost of sales

Cost of sales decreased by approximately $1.7 million or 6.7%, from approximately $24.6 million in FY2022 to approximately $22.9 million in FY2023; relatively in line with the decrease in revenue.

Gross profit and gross profit margin

Gross profit decreased by approximately $1.8 million or 19.0% from approximately $9.6 million in FY2022 to approximately $7.7 million in FY2023; mainly due to a decrease in revenue. Gross profit margin decreased by 2.8 percentage points, from 28.0% in FY2022 to 25.2% in FY2023, mainly due to higher unit cost of production attributable to raw materials, labour, energy and depreciation costs.

Other income and gains

Other income and gains decreased by approximately $0.3 million or 37.0%, from approximately $0.8 million in FY2022 to approximately $0.5 million in FY2023; mainly due to lower government grants and rebates recognised of approximately $0.3 million including the absence of one-off grant for Equity Market Singapore Scheme and Jobs Support Scheme.

Expenses

Marketing and distribution costs

Marketing and distribution costs increased by approximately $0.1 million or 6.1%, from approximately $2.4 million in FY2022 to approximately $2.5 million in FY2023, mainly due to higher advertising and promotional expenses.

Administrative expenses

Administrative expenses decreased marginally by approximately $28,000 or 0.5%, from approximately $5,900,000 in FY2022 to approximately $5,872,000 in FY2023, mainly due to a decrease in professional fees of $170,000, partially offset by an increase in payroll-related costs of $154,000.

Finance costs

Finance costs decreased by approximately $21,000 or 9.1%, from approximately $232,000 in FY2022 to approximately $211,000 in FY2023, as the Group continues to repay on the loans and borrowings during the financial year.

Other losses

Other losses increased by approximately $0.9 million or 698.4%, from approximately $0.1 million in FY2022 to approximately $1.0 million in FY2023, mainly due to impairment of trade and other receivables of approximately $0.5 million, of which approximately $0.4 million was in relation to our joint-venture company, and translation loss on foreign exchange as a result of the weakening of the Malaysian Ringgit against the Singapore Dollar of approximately $0.4 million.

Share of loss from joint venture

Share of loss from joint venture increased by approximately $0.3 million or 128.8%, from approximately $0.2 million in FY2022 to approximately $0.5 million in FY2023. During the year, the manufacturing site on Bulan Island, operated by our joint-venture company Delta Bridge Pte. Ltd., was temporarily shut down due to a shortage of raw material caused by the African Swine Fever detected in pigs on the island. As a result of the shutdown, certain impairment charges in relation to Delta Bridge Pte. Ltd. were recognised.

Income tax expense

Income tax expenses decreased by approximately $0.3 million or 86.0%, from approximately $0.4 million in FY2022 to approximately $0.1 million in FY2023, mainly due to deferred tax recognised.

Loss for the financial year

As a result of the above, the Group incurred a loss after tax of approximately $1.9 million for FY2023 compared to a profit after tax of $1.1 million for FY2022.

2H2023 vs 2H2022

Statement of Comprehensive Income

Revenue

Business Segments

Revenue decreased by approximately $2.1 million or 13.6%, from approximately $15.4 million in 2H2022 to approximately $13.3 million in 2H2023, mainly due to decrease in sales from Modern Trade and General Trade, offset by an increase from Food Services and Others segments.

Revenue from the Modern Trade segment decreased by approximately $0.2 million or 5.0%, from approximately $3.8 million in 2H2022 to approximately $3.6 million in 2H2023, mainly due to muted consumer demand amidst increased product varieties in the market.

Revenue from the General Trade segment decreased by approximately $2.4 million or 33.5%, from approximately $7.2 million in 2H2022 to approximately $4.8 million in 2H2023, mainly due to slow product offtake amidst fierce market competition and weaker consumers' spending power in Malaysia.

Revenue from the Food Services segment increased by approximately $0.4 million or 13.3%, from approximately $3.0 million in 2H2022 to approximately $3.4 million in 2H2023, mainly due to higher demand for the Group’s products as a result of the lifting of COVID-19 restrictions that allowed operators in this segment to resume their capacities.

Revenue from the Others segment increased by approximately $0.1 million or 7.8%, from approximately $1.4 million in 2H2022 to approximately $1.5 million in 2H2023, mainly due higher sales to overseas customers.

Geographical information

Revenue from the Singapore market decreased by approximately $0.2 million or 2.1%, from approximately $10.9 million in 2H2022 to approximately $10.7 million in 2H2023, mainly due to lower demand for products in the Modern Trade and General Trade segments.

Revenue from the Malaysia market decreased by approximately $2.1 million or 52.7%, from approximately $3.9 million in 2H2022 to approximately $1.8 million in 2H2023, mainly due to slow product offtake amidst fierce market competition and weaker consumers' spending power in Malaysia.

Revenue from Others segment increased by approximately $0.2 million or 28.9%, from approximately $0.6 million in 2H2022 to approximately $0.8 million in 2H2023, mainly due to sales generated by our Philippines subsidiary and higher export sales.

Cost of sales

Cost of sales decreased by approximately $0.9 million or 7.9%, from approximately $11.0 million in 2H2022 to approximately $10.1 million in 2H2023, in line with the decrease in revenue.

Gross profit and gross profit margin

Gross profit decreased by approximately $1.2 million or 27.8% from approximately $4.4 million in 2H2022 to approximately $3.2 million in 2H2023, mainly due to lower revenue. Gross profit margin decreased by 4.7 percentage points, from 28.4% in 2H2022 to 23.7% in 2H2023, mainly due to higher unit cost of production attributable to raw materials, labour and depreciation costs.

Other income and gains

Other income and gains decreased by approximately $89,000 or 22.8%, from approximately $390,000 in 2H2022 to approximately $301,000 in 2H2023, mainly due to less government grants recognised of approximately $73,000.

Expenses

Marketing and distribution costs

Marketing and distribution costs increased by approximately $0.1 million or 13.2%, from approximately $1.0 million in 2H2022 to approximately $1.1 million in 2H2023, mainly due to higher advertising and promotional expenses.

Administrative expenses

Administrative expenses decreased by approximately $55,000 or 1.8%, from approximately $2,988,000 in 2H2022 to approximately $2,933,000 in 2H2023, mainly due to a decrease in professional fees, offset by an increase in payroll-related costs.

Finance costs

Finance costs increased by approximately $6,000 or 5.4%, from approximately $111,000 in 2H2022 to approximately $117,000 in 2H2023, mainly due to increase in interest on lease liabilities.

Other losses

Other losses increased by approximately $0.7 million or 487.4%, from approximately $0.1 million in 2H2022 to approximately $0.8 million in 2H2023, mainly due to impairment of trade and other receivables of approximately $0.5 million, of which approximately $0.4 million was in relation to our joint-venture company , translation loss on foreign exchange as a result of the weakening of the Malaysian Ringgit against the Singapore Dollar of approximately $0.1 million and allowance for inventory obsolescence of approximately $0.1 million.

Share of loss from joint venture

Share of loss from joint venture increased by approximately $0.2 million or 130.7%, from approximately $0.2 million in 2H2022 to approximately $0.4 million in 2H2023. During the year, the manufacturing site on Bulan Island, operated by our joint-venture company Delta Bridge Pte Ltd, was temporarily shut down due to a shortage of raw material caused by the African Swine Fever detected in pigs on the island. As a result of the shutdown, certain impairment charges were recognised.

Income tax expense

Income tax expenses decreased by approximately $194,000 or 96.5%, from approximately $201,000 in 2H2022 to approximately $7,000 in 2H2023, due to deferred tax recognised.

Loss for the financial year

As a result of the above, the Group incurred a loss after tax of approximately $1.9 million for 2H2023 compared to a profit after tax of $0.2 million for 2H2022.

Statement of Financial Position

The comparative commentary for both the assets and liabilities are based on the Group’s financial statements as at 30 June 2023 and 30 June 2022.

Non-current assets

Non-current assets decreased by approximately $1.3 million from approximately $15.2 million as at 30 June 2022 to approximately $13.9 million as at 30 June 2023.

Property, plant and equipment (“PPE”) decreased by approximately $0.3 million from approximately $11.4 million as at 30 June 2022 to approximately $11.1 million as at 30 June 2023, mainly due to additions of PPE of approximately $1.0 million, offset by depreciation charges of approximately $1.3 million. Right-of-use assets decreased by approximately $0.3 million from approximately $3.1 million as at 30 June 2022 to approximately $2.8 million as at 30 June 2023, mainly due to depreciation charges. Investment in joint venture decreased by approximately $0.5 million from approximately $0.5 million as at 30 June 2022 due to share of losses during the financial year. There was an absence of non-financial assets amounting to $0.2 million due to deposit utilised.

Current assets

Current assets decreased by approximately $1.8 million from approximately $23.7 million as at 30 June 2022 to approximately $21.9 million as at 30 June 2023, mainly due to a decrease in cash and cash equivalents by approximately $0.6 million, decrease in non-financial assets of approximately $0.6 million, decrease in trade and other receivables of approximately $0.5 million and decrease in inventories of approximately $0.1 million.

The decrease in cash and cash equivalents will be explained under the Cash Flows Statement section. The decrease in other non-financial assets was mainly due to fewer advances made to suppliers for raw materials. The decrease in trade and other receivables was mainly due to impairment of trade and other receivables of approximately $0.5 million, of which approximately $0.4 million was in relation to the impairment of receivables in our joint-venture company. The decrease in inventories was mainly due to lower production levels.

Non-current liabilities

Non-current liabilities increased by approximately $0.1 million from approximately $5.0 million as at 30 June 2022 to approximately $5.1 million as at 30 June 2023, mainly due to increase in other non-financial liabilities of approximately $0.8 million, offset by decrease in lease liabilities of approximately $0.3 million, decrease in deferred tax liabilities of $0.2 million and decrease in loans and borrowings of approximately $0.2 million.

The increase in other non-financial liabilities was due to government grant received during the current financial year, which will be amortised in accordance with the Group’s accounting policy. The decrease in loans and borrowings and lease liabilities were due to repayments made during the financial year. The decrease in deferred tax liabilities was mainly in relation to the capital allowances and losses incurred in the current financial year.

Current liabilities

Current liabilities decreased by $0.8 million from $4.6 million as at 30 June 2022 to $3.8 million as at 30 June 2023, mainly attributable to decrease in trade and other payables of approximately $0.5 million due to the decrease in trade payables which was in line with the decrease in purchases, and the decrease in loans and borrowings of approximately $0.3 million was due to repayment during the financial year.

Statement of Cash Flows

The Group generated approximately $1.6 million of cash inflows from operating activities. This was due to operating cash inflow before working capital changes of approximately $0.3 million and net working capital inflows of approximately $1.6 million, reduced by tax payment of approximately of $0.2 million.

The net working capital inflows was mainly due to an increase in other non-financial liabilities of approximately $1.0 million, decrease in trade and other receivables of approximately $0.5 million, decrease in inventories of approximately $0.1 million, decrease in other non-financial assets of approximately $0.5 million, offset by a decrease in trade and other payables of approximately $0.6 million.

Net cash used in investing activities amounted to approximately $0.7 million, mainly due to purchase of plant and equipment of approximately $1.0 million, offset by utilisation of deposit paid of approximately $0.2 million and interest income of approximately $0.1 million.

Net cash flows used in financing activities amounted to approximately $1.5 million, mainly due to repayment of loan and borrowings of approximately $0.5 million, dividend paid to shareholders of approximately $0.5 million and payment of lease liabilities of approximately $0.5 million.

As a result of the above, there was a decrease in cash and cash equivalents of approximately $0.6 million to $8.9 million as at 30 June 2023 compared with $9.5 million as at 30 June 2022.

Commentary

The Group expects that inflationary pressure coupled with a high interest rate environment will continue to weigh on consumers’ spending patterns, and market competition will remain intense. In light of these challenges, the Group will continue to control our cost structure tightly, improve the efficiency of production and product distribution, and engage in marketing activities to increase product awareness.