News

3rd Quarter 2003 Financial Statement Announcement

BackNov 11, 2003

PART I - INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY (Q1, Q2 & Q3), HALF-YEAR AND FULL YEAR RESULTS

    1(a) An income statement (for the group) together with a comparative statement for the corresponding period of the immediately preceding financial year

      Group
      (S$'000)
      Group
      (S$'000)
      % Increase/ (Decrease)
      Group
      (S$'000)
      Group
      (S$'000)
      % Increase/ (Decrease)
      July-Sept 2003
      July-Sept
      2002
      Jan-Sept
      2003
      Jan-Sept
      2002
      Revenue
      36,081
      28,646
      25.95
      94,223
      72,959
      29.15
      Costs and expenses
      Changes in inventories in finished goods
      (1,231)
      676
      NM
      29
      3,054
      (99.05)
      Raw materials and consumables used (Note 1)
      (16,131)
      (14,083)
      14.54
      (45,010)
      (37,444)
      20.21
      Depreciation and amortisation expenses
      (380)
      (267)
      42.32
      (1,051)
      (755)
      39.21
      Foreign exchange gain/(loss)
      (400)
      (424)
      (5.66)
      (437)
      (1,331)
      (67.17)
      Other operating expenses
      (15,033)
      (9,584)
      56.86
      (38,883)
      (24,664)
      57.65
      Other income
      55
      58
      (5.17)
      78
      128
      (39.06)
      Total costs and expenses
      (33,120)
      (23,624)
      40.20
      (85,274)
      (61,012)
      39.77
      Profit from operating activities
      2,961
      5,022
      (41.04)
      8,949
      11,947
      (25.09)
      Finance costs
      (43)
      (12)
      NM
      (78)
      (40)
      95.00
      Share of loss of associated company
      (2)
      (102)
      (98.04)
      (97)
      (194)
      (50.00)
      Profit before taxation
      2,916
      4,908
      (40.59)
      8,774
      11,713
      (25.09)
      Taxation (Note 2)
      (448)
      (1,292)
      (65.33)
      (1,752)
      (2,667)
      (34.31)
      Minority interests, net of taxation
      (319)
      (381)
      (16.27)
      (1,149)
      (997)
      15.25
      Profit after taxation and minority interests
      2,149
      3,235
      (33.57)
      5,873
      8,049
      (27.03)

      NM- Not meaningful

      Note 1: The movements in raw materials and consumables used are proportionately the same as the increase in revenue due to the changes in inventories of finished goods.

      Note 2: The change in effective tax rate for this quarter is due to tax incentives enjoyed by a subsidiary company which was only adjusted in the current quarter.

    1(b)(i) A balance sheet (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year

Group
Group
Company
Company
30/09/2003
(S$'000)
31/12/2002
(S$'000)
30/09/2003
(S$'000)
31/12/2002
(S$'000)

Assets Less Liabilities

Non Current Assets

Fixed assets (Note 1)
14,084
11,994
-
-

Investments in subsidiary companies
-
-
12,676
12,676

Investment in associated company (Note 2)
1,165
448
1,242
428

Deferred tax assets
288
218
-
-

Intangible assets
44
59
-
-
15,581
12,719
13,918
13,104

Current assets

Cash and bank balances
7,076
8,122
27
47

Trade receivables (Note 3)
19,281
15,880
-
-

Prepayments, other deposits and other receivables
4,628
3,840
111
108

Amount due from subsidiary companies
-
-
18,071
21,306

Amount due from associated company
191
991
191
991

Inventories
27,800
29,221
-
-
58,976
58,054
18,400
22,452

Current liabilities

Trade payables
(7,760)
(10,619)
-
-

Bills Payable
(2,510)
(167)
-
-

Other payables (Note 3)
(6,314)
(4,210)
(212)
(211)

Finance lease liabilities
-
(7)
-
-

Provision for taxation
(1,738)
(2,599)
(32)
(2)

(18,322)
(17,602)
(244)
(213)

Net current assets
40,654
40,452
18,156
22,239

Non-Current Liabilities

Finance lease liabilities
-
(28)
-
-

Deferred tax liabilities
(306)
(306)
-
-
(306)
(334)
-
-

Net assets
55,929
52,837
32,074
35,343

Equity

Share capital
17,200
17,200
17,200
17,200

Reserves
35,631
33,142
14,874
18,143
52,831
50,342
32,074
35,343

Minority interest
3,098
2,495
-
-
55,929
52,837
32,074
35,343

      Notes:

      1. The increase in fixed assets was a result of investment in machinery and expansion of factories.
      2. Investment in associated company increased as a result of an increase in its equity.
      3. The increase in trade receivables and other payables was in line with the increase in revenue.

    1(b)(ii) Aggregate amount of group's borrowings and debt securities

      Amount repayable in one year or less, or on demand

      As at 30/09/2003
      As at 31/12/2002
      Secured
      Unsecured
      Secured
      Unsecured
      (S$'000)
      0
      (S$'000)
      2,510
      (S$'000)
      0
      (S$'000)
      174

      Amount repayable after one year
      As at 30/09/2003
      As at 31/12/2002
      Secured
      Unsecured
      Secured
      Unsecured
      (S$'000)
      0
      (S$'000)
      0
      (S$'000)
      0
      (S$'000)
      28

      Details of any collateral

      NIL

    1(c) A cash flow statement (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year

    3 mths ended
    30 Sept
    2003
    3 mths ended
    30 Sept 2002
    9 mths ended
    30 Sept 2003
    9 mths ended
    30 Sept 2002
    (S$'000)
    (S$'000)
    (S$'000)
    (S$'000)
    Cash flows from operating activities:
    Profit from ordinary activities before taxation and minority interests
    2,916
    4,908
    8,774
    11,713
    Adjustments for:
    Amortisation of goodwill
    5
    5
    15
    16
    Depreciation of fixed assets
    375
    262
    1,036
    739
    Exchange realignment
    (80)
    30
    (40)
    (101)
    Loss on disposal of fixed assets
    4
    5
    245
    9
    Interest income
    -
    (10)
    (3)
    (30)
    Interest expense
    43
    12
    78
    40
    Share of loss of associated company
    2
    102
    97
    194
    Capital reserve written off
    -
    -
    -
    (16)
    Operating income before reinvestment in working capital
    3,265
    5,314
    10,202
    12,564
    Increase in receivables
    (2,326)
    (2,551)
    (4,188)
    (3,782)
    Decrease/ (Increase) in inventories
    4,298
    318
    1,421
    (896)
    (Decrease)/ Increase in payables
    (687)
    776
    1,587
    1,313
    Cash generated from operations
    4,550
    3,857
    9,022
    9,199
    Income taxes paid
    (994)
    (1,817)
    (2,688)
    (4,231)
    Net cash generated from operating activities
    3,556
    2,040
    6,334
    4,968
    Cash flows from investing activities
    Interest received
    -
    10
    3
    30
    Purchase of fixed assets
    (1,129)
    (540)
    (3,469)
    (1,563)
    Proceeds on maturity of other financial asset
    -
    -
    -
    500
    Proceeds from sale of fixed assets
    121
    10
    121
    14
    Dividends paid to minority shareholder of subsidiary company
    (537)
    -
    (537)
    -
    Loan to associated company
    -
    (193)
    -
    (193)
    Net cash used in investing activities
    (1,545)
    (713)
    (3,882)
    (1,212)
    Cash flows from financing activities
    Interest paid
    (43)
    (12)
    (78)
    (40)
    Dividend paid to shareholders of the Company
    -
    -
    (3,354)
    (1,948)
    Repayment of short term financing
    (92)
    (284)
    (66)
    (414)
    Repayment of term loan
    -
    (6)
    -
    (48)
    Net cash used in financing acitivities
    (135)
    (302)
    (3,498)
    (2,450)
    Net increase/ (decrease) in cash and cash equivalents
    1,876
    1,025
    (1,046)
    1,306
    Cash and cash equivalents at beginning of the period
    5,200
    9,109
    8,122
    8,828
    Cash and cash equivalents at end of the period
    7,076
    10,134
    7,076
    10,134

     

    1(d)(i) A statement (for the issuer and group) showing either (i) all changes in equity or (ii) changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year

      Share Capital
      Share Premium
      Capital Reserve
      Foreign Currency Translation Reserve
      Revenue Reserve
      Total
      (S$'000)
      (S$'000)
      (S$'000)
      (S$'000)
      (S$'000)
      (S$'000)
      The Group
      Balance as at 01/01/2002
      17,200
      6,086
      16
      355
      14,263
      37,920
      Net profit for the period
      -
      -
      -
      -
      2,229
      2,229
      Movements during the period
      -
      -
      (16)
      (34)
      -
      (50)
      Balance as at 31/03/2002
      17,200
      6,086
      -
      321
      16,492
      40,099
      Net profit for the period
      -
      -
      -
      -
      2,585
      2,585
      Movements during the period
      -
      -
      -
      (264)
      -
      (264)
      Dividends paid during the period
      -
      -
      -
      -
      (1,948)
      (1,948)
      Balance as at 30/06/2002
      17,200
      6,086
      -
      57
      17,129
      40,472
      Net profit for the period
      -
      -
      -
      -
      3,235
      3,235
      Movements during the period
      -
      -
      -
      66
      -
      66
      Balance as at 30/09/2002
      17,200
      6,086
      -
      123
      20,364
      43,773
      Balance as at 01/01/2003
      17,200
      6,086
      -
      (53)
      27,109
      50,342
      Net profit for the period
      -
      -
      -
      -
      2,922
      2,922
      Movements during the period
      -
      -
      -
      109
      -
      109
      Balance as at 31/03/2003
      17,200
      6,086
      -
      56
      30,031
      53,373
      Net profit for the period
      -
      -
      -
      -
      802
      802
      Movements during the period
      -
      -
      -
      (34)
      -
      (34)
      Dividends paid during the period
      -
      -
      -
      -
      (3,354)
      (3,354)
      Balance as at 30/06/2003
      17,200
      6,086
      -
      22
      27,479
      50,787
      Net profit for the period
      -
      -
      -
      -
      2,149
      2,149
      Movements during the period
      -
      -
      -
      (105)
      -
      (105)
      Balance as at 30/09/2003
      17,200
      6,086
      -
      (83)
      29,628
      52,831
      The Company
      Balance as at 01/01/2002
      17,200
      6,086
      -
      -
      2,843
      26,129
      Net (loss) for the period
      -
      -
      -
      -
      (9)
      (9)
      Balance as at 31/03/2002
      17,200
      6,086
      -
      -
      2,834
      26,120
      Net (loss) for the period
      -
      -
      -
      -
      (114)
      (114)
      Dividends paid during the period
      -
      -
      -
      -
      (1,948)
      (1,948)
      Balance as at 30/06/2002
      17,200
      6,086
      -
      -
      772
      24,058
      Net (loss) for the period
      -
      -
      -
      -
      (26)
      (26)
      Balance as at 30/09/2002
      17,200
      6,086
      -
      -
      746
      24,032
      Balance as at 1/1/2003
      17,200
      6,086
      -
      -
      12,057
      35,343
      Net profit for the period
      -
      -
      -
      -
      66
      66
      Balance as at 31/03/2003
      17,200
      6,086
      -
      -
      12,123
      35,409
      Net profit for the period
      -
      -
      -
      -
      2
      2
      Dividends paid during the period
      -
      -
      -
      -
      (3,354)
      (3,354)
      Balance as at 30/06/2003
      17,200
      6,086
      -
      -
      8,771
      32,057
      Net profit for the period
      -
      -
      -
      -
      17
      17
      Balance as at 30/09/2003
      17,200
      6,086
      -
      -
      8,788
      32,074

     

    1(d)(ii) Details of any changes in the company's share capital arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares or cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on. State also the number of shares that may be issued on conversion of all the outstanding convertibles as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year

      There was no change in the Company's share capital during the period under review. As at 30 September 2003, there were unexercised options for 17,435,000 of unissued ordinary shares of the Company under the Food Empire Share Option Scheme. (30/09/02: 17,720,000)

    2. Whether the figures have been audited, or reviewed and in accordance with which standard (e.g. the Singapore Standard on Auditing 910 (Engagements to Review Financial Statements), or an equivalent standard)

      The figures are unaudited and were not reviewed by the auditors.

    3. Where the figures have been audited or reviewed, the auditors' report (including any qualifications or emphasis of matter)

      Not applicable.

    4. Whether the same accounting policies and methods of computation as in the issuer's most recently audited annual financial statements have been applied

      The Group has applied the same accounting policies and methods of computation in the financial statements for the current financial period compared with the audited financial statements as at 31st December 2002.

    5. If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change

      Not applicable.

    6. Earnings per ordinary share of the group for the current period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends

      Group Figures
      Group Figures
      Group Figures
      Group Figures
      3 mths ended
      30/09/2003
      3 mths ended
      30/09/2002
      9 mths ended
      30/09/2003
      9 mths ended
      30/09/2002
      Earnings per share
      (i) Based on existing issued share capital (cents)
      0.62
      0.94
      1.71
      2.34
      (ii) On a fully diluted basis (cents)
      0.61
      0.92
      1.66
      2.30

      Earnings per ordinary share on existing issued share capital is computed based on weighted average number of 344,000,000 ordinary shares during the period. (30/09/2002:344,000,000)

      Earnings per ordinary share on a fully diluted basis is computed based on weighted average number of 352,823,714 ordinary shares during the period adjusted to assume conversion of all potential dilution. (30/09/2002:350,562,963)

    7. Net asset value (for the issuer and group) per ordinary share based on issued share capital of the issuer at the end of the (a) current period reported on and (b) immediately preceding financial year

      Group
      Group
      Company
      Company
      30/09/2003
      31/12/2002
      30/09/2003
      31/12/2002
      Net asset backing per ordinary share (cents)
      15.36
      14.63
      9.32
      10.27

       

    8. A review of the performance of the group, to the extent necessary for a reasonable understanding of the group's business. The review must discuss any significant factors that affected the turnover, costs, and earnings of the group for the current financial period reported on, including (where applicable) seasonal or cyclical factors. It must also discuss any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on

      Third quarter 2003 ('3Q03') versus third quarter 2002 ('3Q02')

      Group Revenue increased by S$7.5 million or 26.0% to S$36.1 million in 3Q03, as compared to the corresponding period last year of S$28.6 million. Profit before Taxation declined by 40.6% to S$2.9 million and Profit after Taxation and Minority Interests fell by 33.6% to S$2.1 million as compared to 3Q02.

      The Group's net cash position increased by S$1.9 million to S$7.1 million in 3Q03. Net cash generated from operating activities increased to S$3.6 million mainly due to a reduction in inventory level. Cash outflow of S$1.5 million in the Group's investment activities was largely used for the purchase of new machineries and the payment of dividend to minority shareholder of a subsidiary company.

      Revenue

      The increase in Group Revenue in 3Q03 was due to stronger sales in key market segments in Russia, Eastern Europe and Central Asia. Russia contributed 56.8% to Group Revenue followed by Eastern Europe and Central Asia with 38.1%. Other Markets contributed to the remaining 5.1% of Group Revenue.

      Revenue from Russia grew 29.4% or S$4.7 million to S$20.5 million in 3Q03 as compared to 3Q02. This growth was mainly due to increased sales for core brands as a result of increased brand awareness through nation-wide and region-wide advertising and promotion ("A&P") programmes.

      Eastern Europe and Central Asia recorded S$13.8 million in revenue, up 43.5% or S$4.2 million from the same period last year due to heightened brand awareness through extensive A&P programmes.

      Revenue from Other Markets fell by 43.0% or S$1.4 million to S$1.8 million in 3Q03 largely due to the cessation of frozen seafood trading under a subsidiary.

      In terms of product segments, revenue from Beverage product segment grew 30.9% to S$33.4 million while Non-Beverage product segment dipped 13.9% to S$2.7 million. The Beverage product segment remained as the Group's core business contributing 92.5% to Group Revenue.

      Profit Before Taxation

      The decrease in Profit before Taxation was due largely to an increase in Other Operating Expenses by 56.9% or S$5.4 million to S$15.0 million. The bulk of the operating expenses was for higher A&P expenditure and overseas operating expenses as a result of the Group's strategic move to gear up in an increasingly competitive business environment. Others include expenses incurred on the launch of new products and higher logistics costs incurred in Russia and Ukraine.

      Nine months ended September 2003 ("Sep 03") versus nine months ended September 2002 ("Sep 02")

      Revenue for the nine months ended Sep 03 grew 29.2% or S$21.2 million to S$94.2 million as compared to the corresponding period last year of S$73.0 million. Profit before Taxation fell by 25.1% to S$8.8 million as compared to nine months ended Sep 02 and Profit after Taxation and Minority Interests declined 27.0% to S$5.9 million. Profit after Taxation and Minority Interests was affected by tighter gross profit margins and higher operating expenses.

      The Group's key markets of Russia contributed 58.4% whilst Eastern Europe and Central Asia contributed 33.8% to Group Revenue. Other Markets made up the balance of 7.8%. Revenue for Russia increased by 31.0% whilst revenue for Eastern Europe and Central Asia increased by 47.8%.

      Revenue for Beverage product segment increased by 32.0% and Non-Beverage product segment grew 7.1%. The Beverage product segment remained the Group's core business contributing 90.5% to Group Revenue.

      The Group's flagship products such as MacCoffee 3-in-1 continued to perform well. The Group continued to invest in the development and marketing of new products which it views as a necessary strategy to strengthen its portfolio and longer-term growth. New product launches will incur investment costs in the initial years and will require a gestation period to build market demand and profitability.

      The Group's net cash position for the nine-month period decreased by S$1.0 million to S$7.1 million. The funds were used mainly for dividends, new equipment, expansion of factories and other operating activities.

    9. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results

      The results are in line with the prospect statement made in the announcement on 2Q03 results.

    10. A commentary at the date of the announcement of the competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months

      The Group operates in increasingly competitive markets and will continue its growth strategy to expand its market share. It will reinforce its core markets by strengthening overseas infrastructure, distribution network and brand building efforts. Advertising and promotions activities have also been stepped up to promote new products and to bolster overall sales during the traditional peak season.

      Overseas operating expenses and A&P expenditure will place some short-term pressure on profit margins. The Group will endeavor to balance strategic growth with cost management. Foreign currency fluctuations will also continue to be a consideration as the bulk of the Group's turnover comes from overseas.

    11. Dividend

      (a) Current Financial Period Reported On

      Any dividend declared for the current financial period reported on? None
      (b) Corresponding Period of the Immediately Preceding Financial Year

      Any dividend declared for the corresponding period of the immediately preceding financial year? None

      (c) Date payable
      Not applicable.

      (d) Books closure date
      Not applicable.

       

    12. If no dividend has been declared/recommended, a statement to that effect

      No dividend is declared/recommended for the period under review.

PART II - ADDITIONAL INFORMATION REQUIRED FOR FULL YEAR ANNOUNCEMENT
(This part is not applicable to Q1, Q2, Q3 or Half Year Results)

    13. Segmented revenue and results for business or geographical segments (of the group) in the form presented in the issuer's most recently audited annual financial statements, with comparative information for the immediately preceding year

      <Place tabular results and/or notes here>

    14. In the review of performance, the factors leading to any material changes in contributions to turnover and earnings by the business or geographical segments

    15. A breakdown of sales

      <Refer to Para 15 of Appendix 7.2 for the required details. Place tabular results and/or notes here>

    16. A breakdown of the total annual dividend (in dollar value) for the issuer's latest full year and its previous full year

      Total Annual Dividend (Refer to Para 16 of Appendix 7.2 for the required details)


      Latest Full Year (S$'000)
      Previous Full Year (S$'000)
      Ordinary
      0
      0
      Preference
      0
      0
      Total:
      0
      0
       
       

BY ORDER OF THE BOARD

Yvonne Choo
Company Secretary
11/11/2003