Neo Group Limited has reported earnings of $13.6 million for the 1HFY2020/2021 ended Sept 30, 2020, some 486.5% up from the earnings of $2.3 million reported a year ago. This was mainly due to higher other income of $9.17 million, which was an increase of 846.6% compared to the $0.97 million a year ago.
This brings earnings per share for 1HFY2020/2021 to 9.24 cents, a significant increase from just 1.58 cents in the previous year.
The $8.2 million increase in other income was primarily attributable to the higher financial grants received from the government during the period, where some $8.0 million represents support for wages and property tax rebates passed down from the landlords.
The higher earnings were also due to the decrease in delivery expenses, as well as expenses for employee benefits, advertising and others such as credit card charges and for repair and maintenance.
During this period, Neo Group announced that it has reorganised its business segments based on its services into four operating segments: catering; manufacturing; supplies and trading; and retail.
Overall, revenue for the 1HFY2020/2021 fell 3.3% y-o-y to $88.1 million, mainly due to the decrease in revenue from the supplies and trading business, as well as the retail business.
The supplies and trading business revenue decreased by 25.1% y-o-y to $11.6 million, mainly attributable to a reduction in low margin trading transactions in the frozen meat business. The retail business on the other hand saw a 26.1% y-o-y drop to $5.5 million, mainly due to the significant drop in physical footfall at the group’s retail outlets and malls during the pandemic.
The fall in revenue was partially offset by the increase in contribution by the catering and manufacturing businesses.
Catering business saw a slight 1.7% y-o-y growth to $44.8 million, due to the short-term dormitory contracts and the strengthening of its recurring income from the “tingkat” business, partially offset by the decline in the traditional catering business. Manufacturing business saw a 10.8% y-o-y increase to $26.2 million, mainly due to higher sales from supermarkets and export business.
As at end-September, the group’s cash and cash equivalents stood at $28.3 million.
The board has also declared an interim dividend of 1.0 cent per share, which will be payable Nov 27. Neo Group did not payout an interim dividend last year.
Moving forward, the group says that it will focus on growing the market share of its catering business by building upon its strong market recognition and branding, while strengthening its recurring income streams through pursuing institutional catering.
Leveraging on its synergistic business segments, the group says that it will continue expanding the range of its product offerings and options to capture the changing consumer behaviour. Its central kitchens, which are strategically located across Singapore, will support the growth of its business through economies of scale.
See: Neo Group to develop multiple income streams; expand along whole supply chain
Neo Kah Kiat, founder, chairman and CEO of Neo Group says, “Through our diversification into the property business, we aim to unlock additional and recurring revenue streams through rental fees and management fees, as well as potential and beneficial synergies with our existing businesses. This will further diversify our business, strengthen our income base for future growth and enhance shareholders’ value.”
Shares in Neo Group closed 15.3% or 6.5 cents higher on Nov 9 at 49 cents.
