Sustainability & CSR

The Group recorded approximately S$1.32 million from food and beverage (“F&B”) revenue for the financial year ended 31 July 2024 (“FY2024”), a decrease of S$0.15 million as compared to the financial year ended 31 July 2023 (“FY2023”). The decrease is mainly attributable to a decrease in F&B revenue from Thailand of S$0.18 million following the closure of Mulligan’s operation with effect from 30 April 2023 and partially offset by an increase in F&B revenue from its Superfood Kitchen outlets of S$0.03 million.

The financial advisory services from Australia contributed marginally to the Group’s revenue of S$0.01 million as the acquisition of AFA was only completed in December 2023.

Other operating income

Other operating income increased by S$0.05 million mainly due to an one-off write-off of payables of S$0.15 million following final settlement with a creditor and bargain purchase arising from the acquisition of AIM of S$0.02 million. The increase was offset by a decrease in government grants and incentives of S$0.07 million and interest income from term deposit of S$0.02 million.

Reversal of expected credit loss allowance, net

The expected credit loss on AFA’s accounts receivables of S$0.28 million, recognised during the purchase price allocation exercise, was reversed in 2H FY2024 due to subsequent collections received.

Costs & expenses

Inventories and consumables used decreased by S$0.04 million to S$0.53 million in FY2024 due mainly to the closure of Mulligan’s operation in Thailand.

Depreciation expenses increased by S$0.10 million to S$0.43 million in FY2024 mainly due to increase in depreciation of plant and equipment for the three F&B outlets under SFK as well as depreciation of right-of-use assets of The Green Bar (“TGB”) outlet at the Alexandra Retail Centre.

Employee benefits decreased by S$0.32 million from S$1.57 million in FY2023 to S$1.25 million in FY2024 mainly due to the closure of Mulligan in Thailand, lower manpower costs at SFK due mainly to the closure of the Central Kitchen and absence of compensation to an ex-director settled in FY2023.

Advertising, media and entertainment decreased by S$0.03 million from S$0.04 million in FY2023 to S$0.01 million in FY2024 mainly due to the decrease in marketing activities for SFK outlets.

Lease expenses decreased by S$0.04 million to S$0.10 million in FY2024 mainly due mainly to the closure of Mulligan in Thailand and termination of the lease for Singapore office as the Company adopts remote work arrangements for its staff.

Legal and professional fees increased by S$0.07 million from S$0.37 million in FY23 to S$0.44 million in FY2024 mainly due to professional fees incurred for the purpose of the acquisitions of AIM and AFA, which was completed in first half of FY2024.

On acquisition date of AFA, a goodwill amounting to S$1.28 million was recognised. As announced by the Company on 24 December 2024, a balance of S$2.29 million, which was included in the net identifiable assets of AFA as at date of acquisition of AFA, remained unpaid as of 31 July 2024. Given the overall slow-down in the IPO market in Australia and uncertainties in the collectability of receivables, the goodwill was fully impaired in 2H FY2024.

Other operating expenses increased by S$0.51 million to S$0.91 million in FY2024 mainly due to the impairment of property, plant and equipment of S$0.52 million, resulting from ongoing operating losses incurred by the F&B business.

As a result of the factors mentioned above, the Group recorded an increase in total expenses of S$1.55 million to S$5.03 million in FY2024.

Loss before income tax

Overall, the Group recorded a loss of S$3.20 million in FY2024 as compared to a loss of S$1.86 million in FY2023 for the reasons stated above.

Review of Statement of Financial Position

Current assets

The Group’s current assets decreased by S$0.70 million to S$0.40 million as at 31 July 2024, from S$1.10 million as at 31 July 2023. This was mainly due to decrease in cash and cash equivalent of S$0.42 million and the decrease in trade and other receivables of S$0.28 million. The decrease in cash and cash equivalents of S$0.42 million is mainly due to the reasons as set out under the “Review of Statement of Cash Flows” section below. The decrease in trade and other receivables of S$0.28 million was mainly due to the absence of S$0.20 million deposit paid in FY2023 for the acquisitions of AFA and AIM.

Non-current assets

Non-current assets decreased by S$0.68 million to S$0.02 million as at 31 July 2024 from S$0.70 million as at 31 July 2023. This was mainly due to the depreciation expense of S$0.43 million and impairment of property, plant and equipment of S$0.52 million recognised for FY2024, partially offset by the increase in property, plant and equipment of S$0.21 million arising from the renewed lease of TGB at Alexandra Retail Centre.

Current liabilities

The Group’s current liabilities increased by S$1.16 million, to S$2.08 million as at 31 July 2024 from S$0.92 million as at 31 July 2023 mainly due to (i) drawdown of loan from a controlling shareholder of S$0.20 million; (ii) balance consideration payable to the vendor for the acquisitions of AFA and AIM of S$0.23 million which has been waived off on 24 December 2024; (iii) increase in payables resulting from the acquisition of AFA of S$0.16 million; (iv) professional fees incurred for the acquisitions of AFA and AIM of S$0.16 million; and (v) increase in lease liabilities of S$0.09 million for TGB’s renewed lease at Alexandra Retail Centre.

Non-current liabilities

This relates to the non-current portion of the lease liabilities of the TGB and SFK outlets. The decrease in lease liabilities of S$0.13 million was mainly due to repayment of lease during FY2024.

Total Equity

The Group was in a net deficit position of S$1.14 million as at 31 July 2024, as compared to an equity attributable to owners of the Company of S$0.89 million as at 31 July 2023. The decrease was mainly due to the net loss attributable to owners of the Company of S$2.83 million recorded in FY2024, offset by (i) an increase in share capital of S$0.76 million for the issue of shares as partial consideration for the acquisitions of AIM and AFA; and (ii) an increase in foreign currency translation reserve of S$0.04 million.

Review of Statement of Cash Flows

The Group’s net cash flows used in operating activities in FY2024 was S$0.49 million, mainly due to net operating cash outflow before changes in working capital of S$1.27 million and offset by net working capital inflow of S$0.78 million.

The net cash flows generated from investing activities in FY2024 was S$0.16 million, mainly due to cash inflow arising from the acquisition of AFA of S$0.14 million and proceeds received from the sale of AIM of S$0.04 million.

The net cash flows used in financing activities in FY2024 was S$0.09 million mainly due to repayment of lease liabilities of S$0.32 million, partially offset by the loan from controlling shareholder of S$0.20 million.

As a result, cash and cash equivalents stood at S$0.23 million as at 31 July 2024.

Commentary

F&B Business in Singapore
We see an overall drop in the F&B revenue in FY2024, a reflection of cautious consumer spending patterns across all outlets and marketing efforts required to enhance our brand presence. However, we strongly believe that post-covid has given rise to a whole new increasing trend of health-conscious consumers seeking for an everyday healthy diet that is easy on their wallet. Eating healthy has become an important aspect to complete their lifestyle, complementing Singapore government’s national initiative Healthier SG to help Singaporeans lead healthier lifestyles. The Group therefore remains cautiously optimistic that healthy eating as a form of “self-care” is here to stay.

Our operating environment remains a challenge due to increasing food and manpower costs and intense competition within the F&B sector. The Group is conscious of the escalating operational costs at our outlets and will continue to find ways to manage outlet expenses. We will seek innovative ideas to drive the business, create an enticing menu to captivate our customers and create awareness through marketing programs to eat and live healthily.

Nevertheless, the Group will continue to exercise due care and diligence in cost management and streamline the use of resources in order to optimize business operations amidst global economics uncertainties.

Assisted Living business
Following the Strategic Review announced by the Company on 17 July 2024 and subsequent update on 15 October 2024, the Board has identified new opportunities for the Group’s long-term growth through the Proposed Diversification into the Assisted Living Business. The Proposed Diversification will enable the Company to tap into new revenue streams, which will strengthen the Group’s overall financial stability and sustainable business model.

The Assisted Living sector seeks to fill a critical gap by providing support services to the elderly who are relatively independent but may require assistance with daily activities and social engagement. Through the combination of residential options with personalised support, the Assisted Living business is catered to offer the elderly safe residential environment together with tailored assistance for daily living activities to maintain a high quality of life for the elderly. The Group believes that the Assisted Living business has strong prospects due to the following reasons:

1. In line with the evolving demographics in Singapore and projections indicating that by 2030, almost 1 in 4 of the population will be aged 65 years and above¹, there is a growing demand for elder care services which presents significant market opportunities. The Assisted Living sector has the potential to fill a critical gap by supporting the elderly, who are relatively independent and may require some level of help with daily activities and socialisation. Accordingly, the Proposed Diversification will place the Group in a strategic position to capitalise on such potential in the Assisted Living sector.

2. The Group will be able to leverage on the expertise of the management, namely Mr Ng Boon Hui, CEO and Executive Chairman of the Group and Mdm Ho Poh Khum, Chief Operating Officer of the Group in real estate and management of large scale co-living business, for a scalable implementation of the Assisted Living Business services. The management also has extensive experience and is well-equipped to source, develop and upskill the relevant operational and care staff internally, thereby enhancing service quality while controlling costs.

3. While there are existing operators in the Assisted Living sector in Singapore, the market remains relatively new and has yet to gain momentum.² By leveraging on the management’s strengths and expertise, coupled with the strategic acquisition of Crescendo, the Group has potential to establish itself in this emerging market.

Advisory Business
During the acquisition of AFA, the Advisory Business was intended to be spearheaded by the previous management. With the change in composition of management and Board, as announced by the Company on 7 May 2024, the Group will continue to re-assess the viability of Advisory Business as part of its continuous Strategic Review and take the appropriate action as necessary. Further announcement(s) will be made in due course when there are material updates or developments with regards to its Advisory Business and Strategic Review.

Notes

1. https://www.population.gov.sg/files/media-centre/publications/Population_in_Brief_2024.pdf
2. https://www.todayonline.com/big-read/big-read-seniors-caregiving-assisted-living-singapore-caregivers-2198511