Old Chang Kee has reported profit of $2.6 million for the 2HFY2021 ended March, reversing from its losses of $705,000 in the same period the year before.
The profit during the period was mainly attributable to government grants and property tax rebates totalling $2.2 million during the half-year period. The grants included the jobs support scheme (JSS), wage credit scheme and special employment scheme.
Profit for the FY2021 stood 929% higher – or nearly 10 times up – at $8.7 million, from profit of $849,000 in the FY2020.
Earnings per share (EPS) for the 2HFY2021 and FY2021 stood at 2.14 cents and 7.20 cents from loss per share of 0.58 cents and 0.7 cents in the same periods respectively.
Revenue for the 2HFY2021 fell 14.5% y-o-y to $37.1 million due to lower revenue from its retail outlets, and offset by higher revenue from delivery and catering sales.
The group was operating a total of 92 outlets in Singapore as at March 31, compared to 89 outlets as at March 31, 2020.
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Revenue from the group’s retail outlets fell by 16.1% y-o-y due to lower revenue derived from outlets that were popular with tourists, as well as the closure of some outlets due to the Covid-19 pandemic.
Revenue from other services – such as delivery and catering – increased by $348,000 mainly due to higher delivery revenue.
Cost of sales fell 17.7% y-o-y to $12.9 million, resulting in a 12.6% y-o-y decline in gross profit of $24.2 million for the 2HFY2021.
Gross margin improved by 1.4 percentage points to 65.2% in the same period due to improved food cost controls and higher production of staff efficiency during the period.
The group registered lower selling and distribution expenses due to rental rebates received from landlords, as well as improved staff and other operating efficiencies.
Other expenses fell 51.7% y-o-y to $1.4 million mainly due to lower impairment of amount due from its joint venture in the UK of around $1.2 million, as well as the group’s Malaysian associate of approximately $143,000.
The group also registered a lower exchange loss of $79,000 mainly due to exchange rate gains on foreign currency denominated payables.
It also had lower fixed assets written off of some $195,000 due to fewer outlet closures, offset by the impairment of right-of-use assets and property, as well as plant and equipment of around $205,000 for retail outlets affected by the pandemic.
FY2021 revenue fell 14.4% y-o-y to $75.3 million due to lower retail revenue and offset by higher revenue from delivery, catering and events.
Revenue from retail outlets fell 26.4% y-o-y due to Covid-19 safe management measures.
Revenue from other services increased by $9.5 million due to catering of packed meals to foreign workers dormitories and higher delivery revenue.
Cost of sales fell 19.1% y-o-y to $25.9 million, which led to an 11.8% y-o-y drop in FY2021 gross profit of $49.4 million.
Gross margin improved by 1.9% to 65.6% in FY2021 mainly due to economies of sale from the large-scale catering of packed meals and improved food cost controls and higher production staff efficiency.
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During the FY2021, other income increased 514.6% y-o-y to $7.3 million due to government grants and property tax rebates.
The lower selling and distribution expenses was due to lower overtime and part-timer costs due to the closure of some outlets during phase one of the circuit breaker period.
The group registered higher administrative expenses due to higher staff incentive provision due to the increase in net profit for the FY2021.
Other expenses fell 48.2% y-o-y to $2.0 million due to lower impairment loss for the group’s joint venture in the UK and its Malaysian associate, as well as exchange rate gains on foreign currency denominated payables.
A final dividend of 1.0 cent per share has been declared for the period, compared to the 0.5 cent declared in the year before.
This is due to the “significant uncertainty on the duration and intensity of the Covid-19 pandemic… [in a bid] to conserve the group’s cash flows”.
In its update, the group says its retail revenues remain below pre-Covid-19 levels to date due to social distancing measures put in place.
This has resulted in operational losses for some of their retail outlets.
As such, the group will continue to review if they will be providing for further impairments to their assets, depending on how the situation pans out.
In Malaysia, UK and Australia, the group has sought new revenue streams including frozen meal kit home deliveries and increased the range of snack deliveries and bento meals for its stay-at-home customers.
As at March 31, cash and cash equivalents stood at $25.2 million.
Shares in Old Chang Kee closed flat at 69.5 cents on May 27.
