In my humble assessment, the financial year that just ended 31 March 2016 (“FY2016”) was a good one for Japan Foods. Although it was a slow economic year and we had to work harder than ever to see results, I am proud that we were able to achieve several milestones and also saw some of our investments pay off.

Of all our achievements in FY2016, I would say the most significant was the launch of our first non-Japanese concept “New ManLee Bak Kut Teh”. Established over 40 years ago, this was franchised from Kuala Lumpur, Malaysia. Shareholders may ask why bak kut teh and why a deviation from Japanese food? My answer to that is that it makes perfect sense. This pork bone soup is a familiar favourite among Singaporeans because of its aromatic soup broth and tender pieces of meat. There are synergies because bak kut teh uses the same major ingredients as the pork bone broth that our central kitchen prepares for our ramen shops across the island. This means that we not only enjoy cost savings from bulk purchases but also can maximise our central kitchen capabilities to launch a new concept that has allowed us to venture into a new cuisine.

There are two versions of the bak kut teh broth – the clear peppery Singaporean version and the dark herbal Malaysian version. While most shops and restaurants serve either or, we serve both versions at our “New ManLee Bak Kut Teh” brand restaurants and we have also given it a twist by offering it with udon in keeping our roots in Japanese cuisine.

The first “New ManLee Bak Kut Teh” brand restaurant, which opened in Clementi Mall in December 2015, did so well that we have since opened two more in Ang Mo Kio Hub in March 2016 and another at Bugis+ in April 2016. Such positive response from diners has certainly given us the confidence and impetus to explore the possibility of launching other non-Japanese concepts that share the same synergies as our existing brands.

FY2016 also saw the launch of two new self-developed concepts at The Paragon in Orchard Road. The first is “Ginza Kushi-Katsu” brand restaurant, which opened in March 2016, featuring a variety of “kushi-katsu”, or deep fried Japanese skewered meat and vegetables. Its signature item, “gyu-katsu” is a premium beef fillet that is deep fried for only 60 seconds at 210°C. This precise method gives the beef cutlet its crispy crust, while the meat within remains mediumrare. Customers can then choose to consume the meat as it is, or they can finish cooking it to their desired doneness on the mini hotplate provided.

The second is “Dutch Baby Cafe” brand restaurant, which opened in April 2016. The café gets its name from the pancakes that are oven-baked in hot cast iron pans – also known as Dutch Baby pancakes. The pancakes are served with a choice of sweet or savoury toppings including banana chocolate or Caesar salad. The café also serves baked curry rice for those who prefer a heartier meal. We have received good customer feedback and press reviews for both new concepts and we will closely monitor their performance before deciding if we should open more stores.

Performance review

In FY2016, the Group achieved a net profit of S$3.8 million on the back of S$62.8 million in revenue. Gross profit came in at S$52.9 million in FY2016, which was 1.1% higher than the S$52.3 million recorded in the preceding financial year ended 31 March 2015 (“FY2015”). This was due to a 0.8 percentage point increase in gross profit margin from 83.4% in FY2015 to 84.2% in FY2016, arising mainly from the efficient use of raw materials and cost savings from self-produced noodles and bulk purchase discounts.

Despite more intense competition and a slowing economy, we are proud to have been able to maintain our sales at the same level as compared to FY2015 thanks to a proven strategy of seasonal promotions, regular menu rejuvenation and restaurant portfolio management. However as compared to FY2015, net profits were down 20.3% mainly because of a one-time impairment charge on plant and equipment in relation to store closures.

Our cash position continues to be healthy with cash and cash equivalents rising from S$15.9 million as at 31 March 2015 to S$16.9 million as at 31 March 2016, with no borrowings.

On a positive front, we received our first dividend payout from our associated company, ACJF Holding Limited, which paid us its maiden dividend in May 2016 amounting to approximately S$174,000. Although not a large sum, it is very meaningful to us as it affirms our investment in this joint venture company to launch the “Menya Musashi” brand in China and Hong Kong.


total dividend pay-out S$3.5 million 92.2% of net profit in FY2016

Subject to the proposed dividends being approved by shareholders at the forthcoming Annual General Meeting in July 2016, the Board of Directors is pleased to propose a tax-exempt, one-tier final dividend of 1.25 Singapore cents per ordinary share to be paid on 15 August 2016, which including the interim dividend of 0.75 Singapore cents per share paid on 9 December 2015, will bring the total dividend for the financial year to 2.00 Singapore cents per share.

This represents a total dividend pay-out ratio of 92.2% of net profit attributable to equity holders of the Company in FY2016.

Despite a weaker financial performance in FY2016, our decision to pay the same total amount of dividend per ordinary share as we did in FY2015 demonstrates the confidence that the Board and management has in the growth prospects of the Group.


We expect the next 12 months to be challenging because the retail and dining scene is feeling the effects of customers curbing their spending. On top of that, we have to manage rising raw material, rental and labour costs.

Having said that, we believe that Singaporeans still love dining out and as long as we keep refreshing our menus and offering seasonal promotions, we will continue to attract crowds. We will also keep a lookout for suitable franchise brands to introduce locally and continue to push out self-developed concepts that may work.

We will keep up our ongoing efforts to contain our operational expenses and to optimise the use of our resources. Our advantage is our extensive brand portfolio, which has enabled us to quickly replace brands that are not doing well at a location with one that can yield better results. This strategy has put us in an advantageous position with landlords and allowed us to maximise our revenue per restaurant.

With our joint venture with ACJF Holding Limited doing well in Hong Kong and China, we are actively exploring opportunities to expand our presence in the ASEAN region by way of other joint-ventures, acquisitions and/or sub-franchising our brands.


In closing, I want to extend my heartfelt thanks to the entire workforce of Japan Foods. We owe our success to your dedication in performing your tasks and your commitment in ensuring consistency and quality of our food so that we can retain loyal customers and even win new ones.

My utmost appreciation to my fellow directors of the Board. Your combined wisdom, experience and guidance have kept us growing in the right direction.

Lastly, I want to thank all Shareholders for participating in our growth story. I believe it will only get more exciting in the years to come and I hope for your support every step of the way.

Takahashi Kenichi Executive Chairman and CEO