Performance Drivers (Positive Factors)

• Restaurants operating under “other brands”

In FY 2019, Japan Foods saw a net rise in revenue of SGD 5.4 million from the restaurants operating under the category “other brands”. This category included new restaurants operating under the “Konjiki Hototogisu”, “Shitamachi Tendon Akimitsu”, “Menzo Butao”, “Kagurazaka Saryo” and “Curry is Drink” brands – which recorded an increase of SGD 7.5 million. However, this segment also comprised restaurants operating under the “New ManLee Bak Kut Teh”, “Kazokutei”, “Fruit Paradise”, “Ginza Kushi Katsu” and “Dutch Baby Cafe” brands – which suffered a SGD 2.1 million drop in FY 2019 revenue due to the closure of certain restaurants and lower same store sales.

Performance Drivers (Negative Factors)

• Restaurants operating under the “Ajisen Ramen” brand

The restaurants operating under the “Ajisen Ramen” brand contributed SGD 23.3 million in FY 2019, which was SGD 3.5 million lower as compared to the SGD 26.8 million in FY 2018. This decline was attributable to the conversion of an “Ajisen Ramen” brand restaurant to a “Menya Musashi” brand restaurant at Takashimaya in November 2017, as well as the closure of an outlet at Marina Bay Sands Shoppes Premium Food Precinct in February 2018. Further, there was a temporary closure of a restaurant at Nex in September 2018 due to re-sizing of floor space, as well as the closure of a restaurant at White Sands in October 2018. In addition, some of the other existing restaurants contributed lower net sales for the year.

• Restaurants operating under the “Menya Musashi” brand

The restaurants operating under the “Menya Musashi” brand contributed SGD 15.4 million in FY 2019, which was SGD 0.4 million lesser than the SGD 15.8 million in FY 2018. The decrease was mainly due to lower net sales generated from existing restaurants. Nevertheless, the decline was partially offset by revenue contribution arising from the opening of new restaurants at North Point and Chinatown Point in September 2017 and September 2018 respectively, as well as the conversion of an “Ajisen Ramen” brand restaurant to a “Menya Musashi” brand restaurant at Takashimaya in November 2017.

• Restaurants operating under the “Osaka Ohsho” brand

The restaurants operating under the “Osaka Ohsho” brand contributed SGD 7.4 million in FY 2019, a drop of SGD 0.5 million as compared to the SGD 7.9 million in FY 2018. This was primarily caused by the closure of a restaurant at Eastpoint Mall in November 2017, as well as lower net sales generated from a number of existing restaurants.

• Other income

Japan Foods’ other income declined by 31.7% from SGD 1.0 million in FY 2018 to SGD 0.7 million in FY 2019 mainly due to lower royalty income from its associated company in China.

• Share of profit of its associated companies

Japan Foods’ share of profit of its associated companies decreased by 72.2% from SGD 0.5 million in FY 2018 to SGD 0.1 million in FY 2019. The decrease came on the back of lower profit from the associated company in China, which operates restaurants under the “Menya Musashi” brand. The associated company in China faced lower revenues from intense competition and weak economic conditions, high initial set-up costs of three new restaurants in December 2018 and January 2019, as well as the closure of a restaurant in November 2018. Japan Foods also received lower profits from the associated company in Hong Kong due to the competitive environment there. The associated company in Indonesia also recorded initial start-up loss in 4Q2019.