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Second Quarter 2003 Financial Statement And Dividend Announcement

BackAug 22, 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)
      Apr-June 2003
      Apr- June
      2002
      Jan-June
      2003
      Jan-June
      2002
      Revenue
      28,755
      23,950
      20.06
      58,142
      44,313
      31.21
      Costs and expenses
      Changes in inventories in finished goods
      919
      3,183
      (71.13)
      1,260
      2,378
      (47.01)
      Raw materials and consumables used (Note 1)
      (14,322)
      (14,458)
      (0.94)
      (28,879)
      (23,361)
      23.62
      Depreciation and amortisation expenses
      (360)
      (273)
      31.87
      (671)
      (488)
      37.50
      Foreign exchange gain/(loss)
      37
      (1,062)
      NM
      (37)
      (907)
      (95.92)
      Other operating expenses
      (13,444)
      (7,651)
      75.72
      (23,850)
      (15,080)
      58.16
      Other (expenses)/ income
      (113)
      45
      NM
      23
      70
      (67.14)
      Total costs and expenses
      (27,283)
      (20,216)
      34.96
      (52,154)
      (37,388)
      39.49
      Profit from operating activities
      1,472
      3,734
      (60.58)
      5,988
      6,925
      (13.53)
      Finance costs
      (30)
      (15)
      100.00
      (35)
      (28)
      25.00
      Share of loss of associated company
      (42)
      (13)
      NM
      (95)
      (92)
      3.26
      Profit from ordinary activities before taxation
      1,400
      3,706
      (62.22)
      5,858
      6,805
      (13.92)
      Taxation
      (279)
      (739)
      (62.25)
      (1,304)
      (1,375)
      (5.16)
      Minority interests,net of taxation
      (319)
      (382)
      (16.49)
      (830)
      (616)
      34.74
      Net profit for the period
      802
      2,585
      (68.97)
      3,724
      4,814
      (22.64)


      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.


    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
    30/6/2003
    (S$'000)
    31/12/2002
    (S$'000)
    30/6/2003
    (S$'000)
    31/12/2002
    (S$'000)
    Assets Less Liabilities
    Non Current Assets
    Fixed assets
    13,470
    11,994
    -
    -
    Investments in subsidiary companies
    -
    -
    12,676
    12,676
    Investment in associated company
    1,166
    448
    1,242
    428
    Deferred tax assets
    288
    218
    -
    -
    Intangible assets
    49
    59
    -
    -
    14,973
    12,719
    13,918
    13,104
    Current assets
    Cash and bank balances
    5,200
    8,122
    55
    47
    Trade receivables
    16,651
    15,880
    -
    -
    Prepayments,other deposits and other receivables
    4,931
    3,840
    105
    108
    Amount due from subsidiary companies
    -
    -
    17,947
    21,306
    Amount due from associated company
    194
    991
    194
    991
    Inventories
    32,098
    29,221
    -
    -
    59,074
    58,054
    18,301
    22,452
    Current liabilities
    Trade payables
    (8,954)
    (10,619)
    -
    -
    Bills Payable
    (3,553)
    (167)
    -
    -
    Other payables
    (4,762)
    (4,210)
    (134)
    (211)
    Finance lease liabilities
    (18)
    (7)
    -
    -
    Provision for taxation
    (2,280)
    (2,599)
    (28)
    (2)
    (19,567)
    (17,602)
    (162)
    (213)
    Net current assets
    39,507
    40,452
    18,139
    22,239
    Non-Current Liabilities
    Finance lease liabilities
    (43)
    (28)
    -
    -
    Deferred tax liabilities
    (307)
    (306)
    -
    -
    (350)
    (334)
    -
    -
    Net assets
    54,130
    52,837
    32,057
    35,343
    Equity
    Share capital
    17,200
    17,200
    17,200
    17,200
    Reserves
    33,587
    33,142
    14,857
    18,143
    50,787
    50,342
    32,057
    35,343
    Minority interest
    3,343
    2,495
    -
    -
    54,130
    52,837
    32,057
    35,343


       

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


      Amount repayable in one year or less, or on demand

      As at 30/06/2003
      As at 31/12/2002
      Secured
      Unsecured
      Secured
      Unsecured
      (S$'000)
      0
      (S$'000)
      3,571
      (S$'000)
      0
      (S$'000)
      174



      Amount repayable after one year

      As at 30/06/2003
      As at 31/12/2002
      Secured
      Unsecured
      Secured
      Unsecured
      (S$'000)
      0
      (S$'000)
      43
      (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 June 2003
      3 mths ended
      30 June 2002
      6 mths ended
      30 June 2003
      6 mths ended
      30 June 2002
      (S$'000)
      (S$'000)
      (S$'000)
      (S$'000)
      Cash flows from operating activities:
      Profit from ordinary activities before taxation and minority interests
      1,400
      3,706
      5,858
      6,805
      Adjustments for:
      Amortisation of goodwill
      5
      5
      10
      10
      Depreciation of fixed assets
      355
      252
      661
      478
      Exchange realignment
      (37)
      (108)
      40
      (132)
      Loss on disposal of fixed assets
      108
      4
      241
      4
      Interest income
      (2)
      (14)
      (3)
      (19)
      Interest expense
      30
      15
      35
      28
      Share of loss of associated company
      42
      13
      95
      92
      Capital reserve written off
      -
      -
      -
      (16)
      Operating income before reinvestment in working capital
      1,901
      3,873
      6,937
      7,250
      Decrease/(Increase) in receivables
      211
      (2,648)
      (1,862)
      (1,232)
      Increase in inventories
      (2,523)
      (2,167)
      (2,877)
      (1,214)
      Increase in payables
      3,741
      2,437
      2,273
      537
      Cash generated from operations
      3,330
      1,495
      4,471
      5,341
      Income taxes paid
      (850)
      (1,202)
      (1,693)
      (2,413)
      Net cash generated from operating activities
      2,480
      293
      2,778
      2,928
      Cash flows from investing activities
      Interest received
      2
      14
      3
      19
      Purchase of fixed assets
      (840)
      (822)
      (2,309)
      (1,023)
      Proceeds on maturity of other financial asset
      -
      -
      -
      500
      Proceeds from sale of fixed assets
      -
      4
      -
      4
      Net cash used in investing activities
      (838)
      (804)
      (2,306)
      (500)
      Cash flows from financing activities
      Interest paid
      (30)
      (15)
      (35)
      (28)
      Dividend paid to shareholders of the Company
      (3,354)
      (1,948)
      (3,354)
      (1,948)
      (Repayment) of/proceeds from short term financing
      (2)
      238
      (5)
      (129)
      Repayment of term loan
      -
      -
      -
      (42)
      Net cash used in financing acitivities
      (3,386)
      (1,725)
      (3,394)
      (2,147)
      Net (decrease)/increase in cash and cash equivalents
      (1,744)
      (2,236)
      (2,922)
      281
      Cash and cash equivalents at beginning of the period
      6,944
      11,345
      8,122
      8,828
      Cash and cash equivalents at end of the period
      5,200
      9,109
      5,200
      9,109



       

    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
      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
      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
      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




       

    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 June 2003, there were unexercised options for 17,785,000 of unissued ordinary shares of the Company under the Food Empire Share Option Scheme. (30/06/02: 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
      30/06/2003
      3 mths ended
      30/06/2002
      6 mths ended
      30/06/2003
      6 mths ended
      30/06/2002
      Earnings per share
      (i) Based on existing issued share capital (cents)
      0.23
      0.75
      1.08
      1.40
      (ii) On a fully diluted basis (cents)
      0.23
      0.74
      1.06
      1.37



      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.(30/06/2002:344,000,000)

      Earnings per ordinary share on a fully diluted basis is computed based on weighted average number of 351,870,645 ordinary shares during the period adjusted to assume conversion of all potential dilution.(30/06/2002:350,133,846)


    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
      30/06/2003
      31/12/2002
      30/06/2003
      31/12/2002
      Net asset backing per ordinary share (cents)
      14.76
      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


      Second quarter 2003 ('2Q03') versus second quarter 2002 ('2Q02')

      Revenue grew S$4.8 million or 20.1% to S$28.8 million in 2Q03, as compared to the same period last year of S$24.0 million. Profit Before Tax ('PBT') fell by 62.2% to S$1.4 million as compared to 2Q02 and Net Profit after Minority Interests and Tax dropped 69.0% to S$0.8 million.

      Net cash position decreased by S$1.7 million in 2Q03 mainly due to the payout of S$3.3 million for dividends declared in FY2002 and S$0.8 million for purchase of fixed assets. This was offset by net cash generated from operating activities of S$2.5 million.

      Revenue

      The increase in Revenue was due to stronger sales in key market segments Russia, Eastern Europe and Central Asia. Russia market contributed 57.8% to the Group Revenue followed by Eastern Europe and Central Asia with 34.3%.

      Revenue from Russia for the period rose 26.0% or S$3.4 million to S$16.6 million as compared to 2Q02 because of the increasing demand for core brand MacCoffee and the expansion of distribution networks. Sales for MacCoffee increased due to organic growth in demand while expansion of the distribution networks to other parts of Russia allowed the Group to reach out to more consumers.

      Revenue from Eastern Europe and Central Asia grew 32.6% or S$2.4 million to S$9.9 million in 2Q03 due to higher demand from greater brand awareness as a result of aggressive advertising and promotion ('A&P') programs.

      Revenue from Other markets declined by 31.4% or S$1.0 million to S$2.3 million due mainly to poorer performance in UK and Singapore in relation to frozen seafood which experienced slower sales.

      Revenue increased 21.8% and 8.5% in both the beverage and non-beverage product segments for 2Q03. The beverage segment remained the Group's core business with an 88.5% contribution to Group Revenue.

      Net Profit Before Tax

      Net Profit Before Tax fell S$2.3 million or 62.2% to S$1.4 million in 2Q03 compared to a year ago due to an increase in Other Operating Expenses by 75.7% to S$13.4 million. This was mainly contributed by higher A&P expenditure, overseas office expenses as a result of a strategic move to strengthen the Group's overseas presence and to gear up for a greater business momentum in an increasingly competitive arena. In addition, the Group incurred higher logistic costs for new products shipped to Russia and Ukraine.

      The Group continued its aggressive A&P efforts in its second largest market segment, Eastern Europe and Central Asia, to further drive awareness of its core brands among consumers. For the quarter under review, the Group promoted its core brands through marketing channels such as television and media advertisements, sponsorships, trade exhibitions, billboards and wet sampling.

      Overseas office expenses grew as the Group continued to invest in manpower and to expand and increase the number of overseas offices in anticipation of an increase in business activities.

      There was a foreign exchange gain of S$37,000 in 2Q03 as compared to a loss of S$1.1 million in 2Q02.

      First half 2003 ('1H03') versus first half 2002 ('1H02')

      Revenue for 1H03 grew 31.2% to S$58.1 million, as compared to the same period last year of S$44.3 million. Profit Before Tax fell by 13.9% to S$5.9 million as compared to 1H02 and Net Profit after Minority Interests and Tax dropped 22.6% to S$3.7 million. The Net Profit was dragged down by higher expenses in 2Q03.

      The Group's key markets Russia and Eastern Europe and Central Asia contributed 59.5% and 31.0% to the Group Revenue respectively. Other Markets made up the balance 9.5%. Revenue for the core markets of Russia, Eastern Europe and Central Asia increased 31.9% and 51.3% respectively.

      In terms of PBT by geographical segment, Russia PBT rose 23.4% to S$6.6 million and Eastern Europe and Central Asia declined 65.2% to S$0.6 million in 1H03. Other markets made losses of S$1.3 million in the same period.

      Revenue increased 32.7% and 19.9% in both the beverage and non-beverage product segments for 1H03. The beverage segment remained the Group's core business with an 89.3% contribution.

      Net cash generated from operating activities for 1H03 is S$2.8 million and net cash used in investing activities is S$2.3 million. The Group invested S$2.3 million in acquiring new machineries and expanding the existing factories.

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


      In first quarter 2003, the Group stated that the market will continue to be competitive and that it would invest in measures such as brand building to gain consumer loyalty and to build on its competitive strength. These measures, undertaken in 2Q03, reduced the Group's profits.

    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 strengthen its overseas sales offices and distribution network and build up the value of its brands through increased advertisements and promotions. These measures are being implemented in preparation for the second half of the year which is traditionally the peak season with stronger sales.

      The increased expenditure on overseas offices and A&P activities are expected to increase the Group's Revenue but may affect the Group's profit margins in the second half of the year.

      Foreign currencies fluctuations will continue to be a factor that will affect our Group's results as the bulk of our revenue is in US dollars.


    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


      Not applicable.

    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


      Not applicable.

    15. A breakdown of sales


      Not applicable.

    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
22/08/2003

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