Condensed Interim Financial Statements For the Six-Month Period Ended 31 December 2022 (“1H2023”)

Profit or Loss

Balance Sheet

Review of Performance

Statement of Comprehensive Income

Revenue

Business Segments

Revenue decreased by approximately $1.3 million or 7.4%, from approximately $18.7 million in 1H2022 to approximately $17.4 million in 1H2023, mainly due to the decrease in sales from Modern Trade, General Trade and Others segments, offset by an increase in sales from Food Services segment.

Revenue from the Modern Trade segment decreased by approximately $0.7 million or 13.8%, from approximately $5.2 million in 1H2022 to approximately $4.5 million in 1H2023, mainly due to weaker consumer demand.

Revenue from the General Trade segment decreased by approximately $1.3 million or 15.9%, from approximately $8.2 million in 1H2022 to approximately $6.9 million in 1H2023, mainly due to increased competition and weaker consumers' spending power in Malaysia.

Revenue from the Food Services segment increased by approximately $0.9 million or 26.6%, from approximately $3.2 million in 1H2022 to approximately $4.1 million in 1H2023, mainly due to increased demand for the Group’s products as a result of the easing of COVID-19 restrictions that led to more dining out and caterings during the financial period.

Revenue from the Others segment decreased by approximately $0.2 million or 9.9%, from approximately $2.1 million in 1H2022 to approximately $1.9 million in 1H2023, mainly due to the decrease in export sales as a result of lower demand from overseas markets.

Geographical information

Revenue from the Singapore market decreased by approximately $0.5 million or 3.4%, from approximately $12.8 million in 1H2022 to approximately $12.3 million in 1H2023, mainly due to lower demand for products in the Modern Trade segment due to the change in consumers' spending preference.

Revenue from the Malaysia market decreased by approximately $1.1 million or 23.6%, from approximately $4.8 million in 1H2022 to approximately $3.7 million in 1H2023, mainly due to decrease in product sales as a result of higher competition and weakening of the consumers’ spending power.

Revenue from Others segment increased by approximately $0.2 million or 16.2%, from approximately $1.1 million in 1H2022 to approximately $1.3 million in 1H2023, mainly due to sales generated by the Philippines subsidiary to various new customers, offset by a decrease in other export sales.

Cost of sales

Cost of sales decreased by approximately $0.8 million or 5.8%, from approximately $13.6 million in 1H2022 to approximately $12.8 million in 1H2023, which was relatively in line with the decrease in revenue.

Gross profit and gross profit margin

Gross profit decreased by approximately $0.6 million or 11.6% from approximately $5.2 million in 1H2022 to approximately $4.6 million in 1H2023; mainly due to lower revenue. Gross profit margin decreased by 1.3 percentage points, from 27.7% in 1H2022 to 26.4% in 1H2023, mainly due to higher cost of production attributable to raw materials, energy and depreciation costs.

Other income and gains

Other income and gains decreased by approximately $0.3 million or 49.6%, from approximately $0.5 million in 1H2022 to approximately $0.2 million in 1H2023; mainly due to a decrease in government grants recognised of approximately $0.2 million, and there was no gain on disposal of plant and equipment and foreign exchange gain recorded during 1H2023 compared with approximately $0.1 million in 1H2022.

Expenses

Marketing and distribution costs

Marketing and distribution costs increased marginally by approximately $15,000 or 1.1%, from approximately $1,379,000 in 1H2022 to approximately $1,394,000 in 1H2023, mainly due to higher advertising and delivery expenses.

Administrative expenses

Administrative expenses increased marginally by approximately $27,000 or 0.9%, from approximately $2,912,000 in 1H2022 to approximately $2,939,000 in 1H2023, mainly due to an increase in payroll-related costs.

Finance costs

Finance costs decreased by approximately $27,000 or 22.3%, from approximately $121,000 in 1H2022 to approximately $94,000 in 1H2023, due to reduction of loans and borrowings during the financial period.

Other losses

Other losses increased by approximately $182,000 or 423.3%, from approximately $43,000 in 1H2022 to approximately $225,000 in 1H2023, mainly due to translation loss on foreign exchange in relation to weakening of the Malaysian Ringgit against the Singapore Dollar.

Share of loss from joint venture

Share of loss from joint venture increased by approximately $65,000 or 122.6%, from approximately $53,000 in 1H2022 to approximately $118,000 in 1H2023, due to losses in respect of the joint venture company as a result of costs incurred as the joint venture company was still in the pilot testing phase of the new production line at the manufacturing site on Bulan Island during the financial period.

Income tax expense

Income tax expenses decreased by approximately $163,000 or 76.2%, from approximately $214,000 in 1H2022 to approximately $51,000 in 1H2023, due to reduction in taxable profit and deferred tax recognised.

Profit for the period

As a result of the above, our profit for the period decreased by approximately $944,000 from profit after tax of approximately $952,000 in 1H2022 to profit after tax of approximately $8,000 in 1H2023.

Statement of Financial Position

The comparative commentary for both the assets and liabilities are based on the Group’s financial statements as at 31 December 2022 and 30 June 2022.

Non-current assets

Non-current assets had remained relatively unchanged at approximately $15.2 million as at 31 December 2022 and 30 June 2022.

Property, plant and equipment increased by approximately $0.1 million from approximately $11.4 million as at 30 June 2022 to approximately $11.5 million as at 31 December 2022, mainly due to additions of PPE of approximately $0.8 million, offset by depreciation charges of approximately $0.7 million. Right-of-use assets decreased by approximately $0.2 million from approximately $3.1 million as at 30 June 2022 to approximately $2.9 million as at 31 December 2022, mainly due to depreciation charges of approximately $0.2 million. Investment in joint venture decreased by approximately $0.1 million from approximately $0.5 million as at 30 June 2022 to approximately $0.4 million as at 31 December 2022, mainly due to share of losses incurred during the financial period. Other receivables of $0.3 million as at 31 December 2022 was in relation to an interestfree loan to our joint venture company. There was an absence of non-financial assets amounting to $0.2 million due to deposit utilised.

Current assets

Current assets decreased by approximately $0.8 million from approximately $23.7 million as at 30 June 2022 to approximately $22.9 million as at 31 December 2022, mainly due to a decrease in cash and cash equivalents by approximately $2.9 million and decrease in non-financial assets of approximately $0.4 million, offset by an increase in trade and other receivables of approximately $2.3 million, increase in inventories of approximately $0.3 million.

The decrease in cash and cash equivalents will be explained under the Cash Flows Statement section. The increase in trade and other receivables was mainly due to higher sales volume in the months approaching the financial period end 31 December 2022, being the festive period. The increase in inventories was mainly due to an increase in stock levels in Singapore and Malaysia for the festive period. Other non-financial assets decreased mainly due to lower advances to suppliers.

Non-current liabilities

Non-current liabilities decreased by approximately $0.2 million from approximately $5.0 million as at 30 June 2022 to approximately $4.8 million as at 31 December 2022, mainly due to decrease in loans and borrowings of approximately $0.1 million and decrease in lease liabilities of approximately $0.2 million, offset by increase in other non-financial liabilities of approximately $0.1 million.

The decrease in loans and borrowings and lease liabilities were due to repayments made during the financial period. The increase in other non-financial liabilities was due to government grant received during the current financial period, which will be amortised in accordance with the Group’s accounting policy.

Current liabilities

Current liabilities decreased by $172,000 from $4,580,000 as at 30 June 2022 to $4,408,000 as at 31 December 2022, mainly attributable to decrease in loans and borrowings of approximately $132,000 due to repayment during the financial period, and the decrease in other non-financial liabilities of approximately $21,000 was due to government grant recognised in the current financial period. Income tax payable decreased mainly due to lower taxable profits. Trade and other payables and lease liabilities were relatively unchanged.

Statement of Cash Flows

The Group had approximately $1.4 million of cash outflows from operating activities mainly due to operating cash inflow before working capital changes of approximately $1.0 million, reduced by net working capital outflows of approximately $2.3 million and tax paid of approximately of $0.1 million.

The net working capital outflow was mainly due to an increase in trade and other receivables of approximately $2.6 million and an increase in inventories of approximately $0.3 million, offset by a decrease in other non-financial assets of approximately $0.4 million and an increase in other nonfinancial liabilities of $0.2 million.

Net cash used in investing activities amounted to approximately $0.6 million, mainly due to purchase of plant and equipment of approximately $0.8 million, offset by utilisation of deposit paid of approximately $0.2 million.

Net cash flows used in financing activities amounted to approximately $1.0 million, mainly due to repayment of loan and borrowings of approximately $0.2 million, dividend paid to shareholders of approximately $0.5 million and repayment of lease liabilities of approximately $0.3 million.

As a result of the above, there was a decrease in cash and cash equivalents of approximately $2.9 million to $6.6 million as at 31 December 2022 compared with $9.5 million as at 30 June 2022.

Commentary

The Group’s operating environment remains challenging as the Group continues to experience high costs of production and intense market competition for our products. Ongoing inflationary pressures may also lower consumers’ spending power. In light of these challenges, the Group will continue to review its cost structure, explore the launch of other new products and expand its distribution channels locally and overseas.