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Condensed Interim Financial Statements For the six months and full year ended 31 December 2023

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Condensed Interim Consolidated Income Statement

Note:
(1) Diluted earnings per share for 6 months and 12 months ended 31 December 2023 and 2022 are the same as basic earnings per share as there were no potentially dilutive ordinary shares.
NM - Not meaningful.

Condensed Interim Consolidated Statement Of Comprehensive Income

Condensed Interim Balance Sheets

Review of Performance

Review of the Group’s 2H and FY2023 Financial Performance

We continued to achieve business growth in FY2023 despite the global uncertainties brought on by the escalation in geopolitical tensions, the high inflationary environment, significant increase in commodity prices and volatility in the regional currencies. For the year, we achieved PATMI of US$46.3 million (Y-o-Y growth of 5.4%) with the following key factors contributing to our performance:

1. Consolidated net sales growth of 12.7% driven by performance of both our Own Brands (Y-o-Y increase of 9.9%) and Agency Brands (Y-o-Y increase of 16.7%) with the growth driven by our businesses in Indonesia and our Regional Markets;

2. In constant currency, consolidated net sales increased 16.2%; and


3. Gross profit margin for FY2023 of 28.5%, lower by 200 basis points compared to FY2022, as a result of 2H 2023’s GPM achieved of 27.3%. This can be attributed to the higher promotional spending in 2023 as a result of increased competition and a strategic increase in investments in order to further strengthen our core brands (especially SilverQueen) as well as investing on building the products which we believe have the growth opportunity for the strongest growth. However, it was partially offset by: (i) growth in our Premium and Value format categories; (ii) higher sales volume achieved; and (iii) initiatives implemented to mitigate the impact of rising input costs.

For 2023, the Group generated net cash flow from operating activities of US$23.9 million, a Y-o-Y increase of US$16.2 million, which was mainly utilised to finance our capital expenditure programme for the year. At 31 December 2023, our cash balance was US$59.4 million.

The Board is proposing a final dividend of 1.74 US cents/share (2.33 Singapore cents/share) and a special dividend of 0.52 US cents/share (0.69 Singapore cents/share). Taken together with the interim dividend of 2.06 US cents/share that was paid on 7 September 2023, total 2023 dividends will be 4.32 US cents/share (higher Y-o-Y by 0.5%). If approved by shareholders at the Annual General Meeting on 23 April 2024, the final and special dividends will be payable on 15 May 2024.

Performance Review by Markets

Indonesia

Net sales from our business in Indonesia was US$163.0 million in 2H 2023, Y-o-Y increase of 8.5%, and US$353.1 million for FY2023 (Y-o-Y increase of 11.2%). In constant currency terms, this would have been higher by 14.6% Y-o-Y. The growth was driven primarily by broad based growth from Own Brands portfolio, especially our Premium brands SilverQueen, Delfi Premium, Van Houten and Take-It.

Our Agency Brands in FY2023 achieved net sales of US$105.1 million, an increase of 15.4% compared to FY2022, driven primarily by the growth in the snacks and consumer categories.

The Regional Markets

For our Regional Markets, revenues for 2H 2023 and FY2023 reached US$92.2 million and US$185.1 million, respectively, higher by 10.1% and 15.6%, over the comparable periods in 2022. The growth achieved was mainly attributed to higher sales of our Goya and Knick Knacks brands and demand for Agency Brands in our Malaysian operations, particularly from contributions of new Agency Brands secured.

Review of Profitability

For 2H 2023 we achieved a Gross Profit Margin of 27.3%, and 28.5% for FY2023, a decrease of 450 basis points and 200 basis points respectively when compared with the 2022 equivalent periods. These declines can be attributed to higher marketing expenses, partly to address heightened competition in Indonesia, and to fund more brand building initiatives. The higher spend was partially offset by strong growth in our Premium and Value format categories, higher sales volume achieved for the year, and effective initiatives that were previously implemented to mitigate the impact of rising input costs.

For the year, Selling and Distribution expenses increased by 13% Y-o-Y although as a percentage of net sales at 11.8%, this was comparable to FY2022. The increase was primarily driven by wage inflation and higher distribution costs.

The Group’s EBITDA margin for 2H 2023 and FY2023 stood at 13.5% and 13.8%, respectively, and were supported by our rigorous management of Selling & Distribution, along with Administrative expenses, when compared to our revenue growth for the year.

For FY2023, the Group’s effective tax rate was 29.3%, lower by 1.1% point compared to FY2022.

Review of Financial Position and Cash Flow

As at 31 December 2023, the Group’s Cash and cash equivalents were US$59.4 million after dividend payments of US$29.1 million and US$23.6 million of capital expenditure (including advances of purchase of property, plant and equipment) during the year. The increase in capital expenditure comprised investment in production equipment in anticipation of continued market growth and for a parcel of land in Indonesia to meet our long-term operational needs. Our current capital expenditure programme will be constantly monitored and evaluated against changes in market conditions, which could result in us prudently deferring investments to a later period, if required. We remain confident that our strong balance sheet provides resiliency in the face of any uncertainties that might emerge going forward.

Total assets at year-end 2023 reached US$420.9 million, higher by US$25.8 million compared to 31 December 2022, primarily from: (i) an increase in trade receivables; and (ii) an increase in property, plant and equipment; partially offset by the lower cash balance. Shareholders’ equity was higher by US$20.0 million as a result of higher retained earnings and a lower foreign currency translation loss although reduced by dividend paid of US$29.1 million.

Commentary

The beginning of 2024 brings with it increasing global uncertainties from heightened geopolitical tensions and escalating macroeconomic challenges. The repercussions of prolonged geopolitical tensions, elevated interest rates, ongoing strain on specific supply chains, soaring commodity prices, especially in cocoa reaching historic levels, could potentially dampen consumer confidence in our key markets during 2024 and moderate our profit growth.

We remain confident we can mitigate many of these potential risks by:

• Remaining focused on growing our core brands and further driving growth in our Premium and Value format categories. Product innovation remains a key part of this strategy in order to provide us with a competitive edge and to create excitement at the shelf space;

• Continuing to implement our strategy to mitigate higher input costs through pro-active price adjustments and other initiatives we had utilized in the past, launch of new high margined products and cost containment initiatives;
• Continuing to strengthen our distribution and manufacturing capabilities and focusing on raising productivity and efficiency targets;
• Continue to tightly manage our operating costs, collections and working capital levels. Although we expect to have higher working capital requirements to support future business growth, we will remain vigilant and tightly manage appropriate levels of receivables, inventories, and payables.

With the solid foundation (the strength of our leading brands, our strong innovation culture and strong distribution) that the Group is built on coupled with our strong balance sheet and cash flow generation, we believe we are well placed to tackle the uncertainties ahead.