SINGAPORE (May 22): Neo Group Limited has announced earnings of $3.9 million for the 4Q ended March, rising 42.8% from $2.7 million a year ago mainly due to higher revenue.   

This brings the group’s FY19 earnings to $5.4 million, up 48.7% y-o-y from $3.6 million previously on higher revenue and lower full-year purchases and consumables used.

Revenue for 4Q rose 7% to $50.9 million from $47.6 million previously, driven mainly by higher contributions from the group’s flagship Food Catering business due to stronger recurring income from the childcare and elderly market segments; a ramp-up in the ‘tingkat’ business from newly-incorporated subsidiaries; as well as revenue from newly-acquired subsidiaries.

This, along with higher revenue from the Food Retail business, helped to offset a decline in contributions from the Food Manufacturing, Supplies & Trading, and Other business segments over the quarter.

For FY19, revenue grew 1.6% to $181 million from $178.2 million a year ago.

The higher full-year topline was attributed to improved revenue contribution mainly from the Food Catering and Food Retail businesses, as well as the Other businesses segment.

While purchases and consumables used grew by 2.9% to $20.72 million over 4Q in line with the quarterly revenue growth, FY19 purchases and consumables used fell 7.8% to $76.5 million from $83 million previously due to lower revenue generated from U-Market Place Enterprise, which has a lower gross margin as compared to other business segments.

Employee benefits expense grew 6.6% and 10.6% to $14.3 million and $54.3 million for 4Q19 and FY19, respectively, due to additional headcount from newly-incorporated and –acquired catering subsidiaries.

4Q and FY19 operating lease expenses fell 31.2% and 18.5% to $1.4 million and $7.3 million, respectively, upon adjusting for SFRS (I) 15.

Other expenses fell 5% to $3.8 million over 4Q, but grew 6.1% to $13.7 million over the full year due to higher credit card charges, commission for events and venue partners, and the upkeep of motor vehicles during the financial year under review.

“Our core catering business continues to exert market dominance with our strong portfolio of brands. We will continue to actively pursue higher-margin and recurring income opportunities across the various market segments. This covers the full spectrum, from childcare and elderly to the fast-growing tingkat business, to institutional catering, corporate clients and venue partnerships,” says Neo Kah Kiat, founder, chairman and CEO of Neo Group.

“Moving ahead, we aim to continuously maximise shareholder returns through improved operational synergies and efficiencies. Through our synergistic business model, we will be actively focused on capturing a greater market share as Singapore’s No. 1 Events Caterer,” he adds.

Shares in Neo Group closed 5 cents higher at 52 cents on Wednesday.