Press Releases

15 June 2020

Café de Coral Group Announces Annual Results for the year ended 31 March 2020

The year under review was a period of unprecedented challenges in the external environment. The Group recorded a decline in revenue and a significant drop in profit attributable to shareholders for the year ended 31 March 2020.

Months of weak market sentiment in Hong Kong had a significant impact on revenue, which were reflected in a 34.5% decline in the Group’s profit attributable to shareholders at the interim period. Although recovery was initially expected during the second half of the year, this market weakness continued into the third quarter. All business segments in Hong Kong – quick service restaurant (QSR), casual dining and institutional catering – as well as in Mainland China were even more severely impacted by the outbreak of the novel coronavirus disease (“COVID-19”) since early 2020, causing the Group’s profit to decline deeper to the extent that a deficit was recorded in the fourth quarter of the year.

In addition, the Group’s results were also impacted by the fact that the Group adopted HKFRS 16 “Leases” retrospectively this financial year and recorded an impairment loss of right-of-use assets of HK$40.6 million. A fair value loss of investment properties of HK$42.4 million was recorded, as compared to a gain of HK$19.8 million for the prior reporting year. Under the influence of all the above-mentioned factors, the Group’s profit attributable to shareholders dropped by 87.1% as compared to last year.

To address the situation at hand since the second quarter, the Group took proactive measures to tighten operational expenses including manpower and productivity management, as well as rental re-negotiation. The business actively protected margins as consumption patterns shifted in response to social distancing regulations by promoting takeaway concepts and offering home delivery services in partnership with third-party food delivery platforms.

The Group’s Mainland operations delivered relatively strong performance until the COVID-19 outbreak, with network expansion accelerating accordingly. Although the Mainland government’s strict COVID-19 response in January 2020 led to restriction of operations at most restaurants, social distancing measures are being gradually loosened as of March.

The resolution of current global health issues remains uncertain – as well as the government’s response to the changing situation, which impacts consumer behaviour. Taking a prudent response, the Group is stringently managing working capital to ensure healthy cash flow and a strong cash position, which are vital to weathering the currently difficult operating environment. We will continue to closely monitor market conditions and focus on effective cost control and steering our business strategies so as to safeguard shareholders’ investments and prepare for a solid return to sustainable growth.


      HIGHLIGHTS

  • The Group’s revenue for the year amounted to HK$7,963.1 million, a 6.2% decrease compared to the previous financial year. Profit attributable to shareholders declined 87.1% to HK$73.6 million. Performance across the Group’s businesses further declined in the second half of the year with deficit recorded in the fourth quarter during the COVID-19 outbreak.
  • To combat the challenges, our quick service restaurant business in Hong Kong took strong actions to control operating costs including manpower and rental expenses, and adapt its business strategies and operations whilst consumption behaviour shifted to accommodate social distancing trends. 
  • The casual dining business was severely hit by the much weakened demand. The division responded actively with manpower deployment, productivity enhancement and business consolidation.
  • The Mainland China business achieved encouraging performance with strong network expansion until the COVID-19 outbreak. The Group is confident of its business growth when the market situation recovers.
  • The Group would remain resilient to the fast changing operating environment and continue to apply stringent cost control measures to safeguard profit.
  • In view of the operating results for the year and to preserve healthy cash flow, the Board does not recommend a final dividend for the year (FY2018/19: HK65 cents per share). An interim dividend of HK19 cents per share was paid during the year, representing a dividend payout ratio of 151.1% for the year.

Please click the below link for the announcement:

https://www.cafedecoral.com/eng/investor_relations/announcements/images/Announcements2020/e_20200615.pdf

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