Extracted from 2008 Annual Report

Dear Shareholders,

FY 2008 ended with an unexpected global financial crisis, taking many businesses around the world on sobering rides. While we are preparing to ride out ours, we remain hopeful of the silver lining every crisis presents us - opportunities to strengthen and better equip ourselves for the good times.

Having been through difficult economic times when we first started the business, we are confident that we will only emerge from this financial tsunami stronger.

2008 in Review

Despite the tightening of budgets, the sales of our flagship brand Sakae Sushi have remained unaffected.

We have been able to maintain our average checks as per previous years and are pleased to record stronger brand loyalty as we register more sales from regular customers belonging to our VIP programme.

Amidst the whirlwind, we have launched four new brands during the year: Sakae Izakaya, The Pasta Shop, Senjyu Sushi (Malaysia) and Kohi Ten (a joint venture). These new specialty brands will help to widen our portfolio in Japanese dining and cater to an increasingly varied audience.

During the year, we had to consolidate some of our overseas ventures. We believe that these hard but wise decisions will enable us to streamline our net-cash position as a group and better position us for the upturn.

Business Outlook

After successive years of aggressive expansion, we have built a prominent brand with a strong local and global presence. This is a good time for us to carefully capitalise on our brand equity to ensure a growth in our market share over the coming years.

Through the implementation of marketing and refined VIP programmes, we are capturing and retaining brand loyalty that will benefit the company’s development in the long run.

During this time of consolidation, while we are open to expansion opportunities, we will only commit to extremely attractive offers without compromising on our brand and financial positions.

Financial Overview

Our turnover increased by 11.9% to SGD93.8 million for FY2008 as compared to SGD83.8 million in FY2007. This was mainly attributable to the increase in revenue from the opening of 26 new outlets (15 in Singapore and 11 overseas).

In tandem with the global economic slowdown, gross profit margin decreased to 69.7% for FY2008 as compared to 71.6% in FY2007.

Other operating income rose to SGD6.4 million compared to SGD0.4 million last year due to the SGD12 million sale of the Group’s Headquarters at One Irving Road, resulting in a gain on disposal of SGD5.8 million.

Marketing Strategies

For Sakae Sushi, we anticipate a change in customer profile as the economic downturn claims jobs and lowers consumer confidence.

In response to expected lower spending, we have revamped our VIP programme to offer better value to our loyal customers and at the same time, attract new customers from the higher spending group who might have reduced their expenses during this time.

We also strongly believe that we will be able to retain our customer pool by increasing our value and maintaining food quality.

Promotions and Strategic Alliances

As a group, we plan to shore up on our market strength and retain market share through implementing promotional strategies that will help our customers enhance their dollar value.

We will cross promote among various brands within our organization with promotional set meals, and collaborate with other complementary brands in the market to help us maintain our market position.

The First Sushi Drive – Through in Singapore

We are proud to announce the newest addition to our Sakae brand – Singapore’s first sushi drive-through.

The first sushi drive-through was created to cater to the budget and health conscious who are always on the go. The concept blends fresh Japanese food with a fast food concept to offer restaurant-quality-food “in-a-hurry” for consumption in the comfort of homes.

Our New Home – Sakae Building

With the construction work of our new Headquarters along Paya Lebar Road already underway, we are anticipating to move there in the near future.

The all new 20,000 square metre facility will serve to house all Apex-Pal operations under one roof. It will bring together the Group’s hot and cold central kitchens, cold room, warehousing facilities, laboratory, research and development centre, as well as office space planned for its corporate support functions.

The purpose of this consolidation is to enhance inter-department synergy and integrate administration and marketing platforms, which will ultimately result in increased efficiency and lowered cost of operations.

Thank You

To achieve an eleven-year-presence in Singapore with more than 90 outlets in 7 countries would have been impossible without your continuous support. I would like to extend my heartfelt gratitude to all of our shareholders, as well as our staff for their dedicated services. Our achievements are yours!

Yours truly,

Douglas Foo
Chairman and Chief Executive Officer