First Quarter Results Financial Statement And Related Announcement
Statement of Comprehensive Income
Review of Performance
Review of Income Statement
The Group achieved a revenue of S$1.1 million for the three months period ended 31 October 2018 ("Q1 FY2019"), approximately a three-fold increase or S$0.7 million compared to the three months period ended 31 October 2017 ("Q1 FY2018"). The increase was mainly derived from the revenue contribution from the subsidiary, e-Holidays Co., Ltd, which accounted for approximately 73% of the Group revenue. The Group is also working on various travel services network and promotion to expand the operations of the travel segment in Japan. Revenue from the food and beverage ("F&B") segment was contributed by two F&B outlets, which are Mulligans Pattaya and Hashida Sushi. Mulligans Pattaya is our only restaurant operating in Thailand, which contributed S$0.1 million or 9% to the Group revenue in Q1 FY2019. Hashida Sushi is a restaurant under the newly setup subsidary, Cloud Eight Pte. Ltd. ("Cloud Eight") which officially opened in Singapore in October 2018. It has contributed S$0.2 million or 18% to the Group revenue. Our F&B companies are continuously rolling out new marketing and promotion activities to attract customers.
Cost & Expenses
Inventories and consumable used expenses saw an increase of S$0.1 million to S$0.2 million, consistent with the increase in the Group's revenue, mainly contributed by the increased sales activities from newly opened Hashida Sushi restaurant in Q1 FY2019.
Travel booking services costs saw an increase of S$0.4 million to S$0.7 million, consistent with the increase in the Group's revenue, mainly contributed by the increased sales activities from travel services in Q1 FY2019.
Advertising, media and entertainment expenses increased to approximately S$56,000 mainly due to increase of advertising activities and promotion from the higher revenues and operating activities. Employee benefits increased to S$0.7 million mainly due to additional staff deployment for the newly opened Hashida Sushi restaurant and additional head count for travel business in Q1 FY2019. The increase in amortisation and depreciation charges to approximately S$74,000 is due to the depreciation of fixed assets and the amortisation of intangible asset.
Operating lease expenses increased to S$0.2 million mainly due to the increased office rental expenses from the new subsidiary, Cloud Eight. Legal and professional fees saw an increase of 57% to S$0.2 million mainly due to related professional and legal fees incurred for the new business transactions and activities in the Q1 FY2019. Other operating expenses in Q1 FY2019 saw an increase to S$0.2 million mainly incurred for setting up of new business entities.
Total expenses in Q1 FY2019 increased from S$1.0 million to S$2.3 million as a result of increased operating costs and related employee expenses, which is directly attributed to higher sales activities and business expansion. As a result of the business expansion, the Group registered a loss of S$1.1 million in Q1 FY2019 as compared to a loss of S$0.5 million in Q1 FY2018.
Review of Statement of Financial Position as at 31 October 2018
The Group's current assets decreased by S$1.2 million, from S$3.3 million as at 31 July 2018 to S$2.1 million as at 31 October 2018. This was mainly a result of the decrease in cash and cash equivalents of S$1.0 million.
The Group's non-current assets increased by S$0.8 million, from S$1.0 million as at 31 July 2018 to S$1.8 million as at 31 October 2018. This was mainly due to the purchase of new plant and equipment of S$0.9 million relating to the expansion of new F&B outlets.
The Group's total current liabilities increased by S$0.2 million, from S$1.2 million as at 31 July 2018 to S$1.4 million as at 31 October 2018 mainly due to an increase in trade and other payables of S$0.2 million as a result of the increased business activities.The existing bank borrowings amounted to approximately S$24,000 is attributed to the travel business.
The Group recorded non-current liabilities of approximately S$8,000 as at 31 October 2018.
The Group's equity decreased by S$0.5 million from S$3.0 million as at 31 July 2018 to S$2.5 million as at 31 October 2018. The decrease was due to the net loss recorded by the Group and was partially offset by non-controlling interest of S$0.6 million from the investment in non-wholly owned subsidiary, Cloud Eight Inc., in Q1 FY2019.
Review of Statement of Cash Flows
The Group's net cash used in operating activities in Q1 FY2019 was S$0.7 million, mainly due to negative operating cash flows before working capital of S$1.0 million, partially offset by working capital inflow of S$0.3 million. This is mainly due to the Group being in the business expansion phase.
The Group's net cash used in investing activities in Q1 FY2019 was S$0.3 million, mainly due to the purchase of plant and equipment of S$1.0 million, partially offset by investment of a non-wholly owned subsidiary, Cloud Eight Inc.,of S$0.7 million.
The cashflow used in financing activities in Q1 FY2019 was approximately S$9,000 due to repayment of borrowings.
As a result, cash and cash equivalents stood at S$0.8 million as at 31 October 2018.
The Group continues to remain cautious about the outlook and condition of the overall business environment in the travel and F&B industry. The Board is mindful of the intense competition of this industry, tight labour supply and increasing costs.
The Group will continue to explore new business opportunities as well as controlling its costs to improve operational efficiency. The Company may explore fund raising exercises, including rights issues, to strengthen its cash position for future business expansions.
The Group will continue to seek opportunities to expand its presence by way of acquisitions and forming new joint-ventures with potential partners. The Group also started a new high-end F&B sushi business led by celebrity chef, Hatch Hashida, and the new restaurant in Singapore has officially opened on 5 October 2018.
As announced on 30 July 2018, the Group has entered into a joint venture agreement with Office Hashida to operate its high-end F&B business in California, US and the investment has been completed on 25 September 2018. We expect the new restaurant to be operational by first quarter of 2019.
The Group is currently in the process of expanding its travel business by extending services to both inbound domestic tour in Japan and overseas travellers. The fintech business unit is currently targeting a key markets in South East Asia as well as in Japan to explore collaboration and partnership with financial institutions to launch its Robo Advisor Platform. Our key segment remains as retail banks, asset managers, pension funds, brokers and insurance companies.