CATALIST-LISTED Old Chang Kee posted a net profit decline of 45.1 per cent to S$3.4 million for the first half of its financial year ended Sep 30, 2021 from S$6.1 million a year earlier.

Earnings per share stood at S$0.0277 for the half year, down from S$0.0505 a year ago.

The group saw its profit margin decrease by 1.7 per cent to 64.3 per cent in H1 FY2022 due mainly to an absence of economies of scale savings from the large-scale catering of packed meals for foreign workers living in dormitories.

Additionally, the proportion of total operating expenses compared with revenue increased from 58.6 per cent to 63.9 per cent in H1 FY2022 due to impairments in both its joint venture in the UK of approximately S$26,000 and the company's Malaysian associate of approximately S$51,000.

Higher exchange loss of S$178,000 also contributed to higher operating expenses as a result of exchange rate loss on foreign currency denominated payables.

Still, revenue held steady at S$38.5 million in the same period, up 0.9 per cent from S$38.2 million the year before.

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Retail outlet revenue increased by approximately S$7.8 million or 28.4 per cent on incremental revenue from new outlets and increased revenue from existing outlets, compared with circuit breaker measures that were implemented in the same period last year to contain the spread of Covid-19.

However, revenue from other services such as delivery and catering declined by approximately S$7.4 million due to the absence of packed catered meals for foreign workers. This was partially offset by higher delivery revenue in the H1 FY2022.

In all, outlet sales increased to S$35.1 million for H1 FY2022 from S$27.3 million a year ago while non-outlet sales declined to S$3.4 million from S$10.9 million.

Other income also saw a decline of S$511,000 due to lower government grants, mainly due to the absence of foreign worker levy rebate of about S$420,000 and lower property tax rebates. These were offset by greater Job Support Scheme (JSS) support, rebates and additional job growth support scheme income for the current period.

The company noted that the retail sector in Singapore and overseas continues to face significant uncertainty. It added that some outlets continued to see operational losses due to various social distancing measures put in place.

"The group will continue to review if there is a need to provide for further impairment to our assets, depending on how Covid-19 pans out in the months ahead," the company said, adding that it has also diversified into meal kit home deliveries and increased the range of snack deliveries and bento meals for stay-at-home customers.

Additionally, the company noted that as economies reopen, it has seen inflationary pressures increase, particular in the cost of raw materials and labour and said that it will continue to reduce operating costs, improve operational efficiencies and seek more non-retail revenue streams such as boosting its e-commerce presence.

The company declared an interim dividend of S$0.01 per share for the half year, up from S$0.005 per share last year. It will be paid on or around Dec 17, after the record date of Dec 3.

Shares of Old Chang Kee closed flat at S$0.69 on Thursday (Nov 11), before the financial results were released.