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RE&S Holdings sees Q4 profit fall by 11.2%

CATALIST-LISTED food and beverage (F&B) operator RE&S Holdings saw a slide in fourth-quarter earnings, as revenue growth could not keep pace with a rise in expenses with new outlets opening.

Net profit fell by 11.2 per cent year on year to S$936,000 for the three months to June 30, according to unaudited financial statements out on Monday, even as revenue inched up by 1.2 per cent to S$35.3 million.

Turnover grew in both the full-service restaurants segment and the quick-service restaurants, convenience and other business, largely thanks to new Ichiban Boshi and Ichiban Sushi outlets, but this was offset by the increase in rental and employment costs.

Earnings per share slipped to 0.26 Singapore cent, from 0.3 Singapore cent previously, while net asset value was 10.06 Singapore cents a share, against 6.98 Singapore cents the year before.

The board has proposed a final dividend of 0.4 Singapore cent a share.

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The F&B industry is expected to stay challenging on hotter competition and the cost pressures of tighter labour and rental markets, said RE&S, which made its trading debut on Nov 22, 2017.

Chief executive and executive director John Yek said in a media statement: "As the group seeks to grow its core operations and strengthen its operational capabilities amidst a challenging retail environment, near-term profitability has been affected due to initial gestation period and higher operating costs incurred for new concepts and new outlets.

"That said, the underlying fundamentals of the business remains strong with positive cash-flow generation. Going forward, we aim to continue growing our network of outlets while optimising business processes for FY2019."

The group added that it will explore opportunities for joint ventures and strategic alliances "to diversify and grow its business offerings".

Full-year net profit came in 37.3 per cent lower, at S$3.6 million, on a 1 per cent uptick in revenue, to S$142.3 million.

RE&S last traded at S$0.20 on Aug 17.

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