Annual Report 2024

CONTENTS

1. Corporate Profile
2. Our Businesses
3. Our Network

1. Message to Shareholders

1. Board of Directors

1. Key Management

1. Financial Highlights

1. Financial Review

1. Corporate Information

This annual report has been reviewed by the Company's Sponsor, PrimePartners Corporate Finance Pte. Ltd. (the "Sponsor"). It has not been examined or approved by the Singapore Exchange Securities Trading Limited (the "Exchange") and the Exchange assumes no responsibility for the contents of this document, including the correctness of any of the statements or opinions made or reports contained in this document.

The contact person for the Sponsor is Ms. Ng Shi Qing, 16 Collyer Quay, #10-00 Collyer Quay Centre, Singapore 049318, sponsorship@ppcf.com.sg.

OUR BUSINESSES

81

FOOD OUTLETS

140

FOOD STALLS/RESTAURANTS

51

HALAL FOOD STALLS/

RESTAURANTS/KIOSKS

OUTLET MANAGEMENT DIVISION

Under our Outlet Management division, the Group operates and manages 66 traditional coffee shops, four (4) industrial canteens, five (5) Halal coffee shops under the brand, Kedai Kopi and three (3) food courts.

With our proven and established track record as a food outlet operator, we have been able to attract quality anchor tenants with whom we have forged strong longstanding relationships. As at the date of this report, Kimly has maintained a healthy occupancy rate of 99.0% for a total of 617 food stalls within our managed food outlets.

FOOD RETAIL DIVISION

Catering to a broad and varied customer base, and supported by our central kitchens, the Group's Food Retail division includes 176 food stalls, 11 Tonkichi and Tenderfresh restaurants and four (4) Tenderfresh kiosks.

Our Food Retail portfolio includes Mixed Vegetable Rice, Teochew Porridge, Dim Sum, Seafood "Zi Char", Japanese Food and Western Food, which operate within the Group's coffee shops, third-party's coffee shops, food courts, F&B kiosk and full service restaurants.

Our central kitchens supply sauces, marinades and semi-finished food products to our Mixed Vegetable Rice, Seafood "Zi Char", Dim Sum and Western food stalls. Additionally, our central kitchen is engaged in manufacturing, processing and sale of food products to customers.

OUTLET INVESTMENT

BUSINESS DIVISION

The Outlet Investment Business division helps the Group secure sustainable and stable rights to strategic business locations, through investments in both freehold and leasehold properties. This approach allows the Group to benefit from rental income and/or capital growth. Under this division, the Group operates four (4) coffee shops, three (3) industrial canteens and a restaurant unit.

On behalf of the Board of Directors (the "Board"), I am delighted to share our results for the financial year ended 30 September 2024 ("FY2024").

While inflation in Singapore has eased in 2024, it remains higher than pre-pandemic levels, keeping energy and food prices elevated1. Amid rising living costs, amplified by the recent GST hike, consumers are feeling the strain. In response, the government has introduced various policy measures, including comprehensive assurance packages, to provide relief and support. In this economic climate, affordability will likely remain a key consideration for customers when choosing their dining options. Local coffee shops remain a popular choice, offering customers an option that is cost-effective whilst providing a sense of familiarity. This trend aligns well with our coffee shop business, which provides quality, budget-friendly meals, positioning us to meet the needs of cost-conscious customers effectively. However, economic uncertainties and increasing operational pressures have heightened challenges in Singapore's food and beverage ("F&B") sector. The rising costs of manpower, raw materials, rentals and utilities have significantly inflated operating expenses, compressing the Group's margins. Nevertheless, we are confident that our adaptability and the resilience of our business portfolio will enable us to navigate these challenges and remain at the forefront of the industry.

STRENGTHENING OPERATIONS

We remained focused on expanding our central kitchen and advancing its capabilities through the integration of technology. This initiative aims to enhance synergy and productivity, driving greater efficiency and support for our Food Retail division. As part of this effort, we have increased the production of semi- finished products, including semi-processed ingredients and sauces, across both the Sauce and Mixed Vegetable Rice ("MVR") central kitchens. The integration of automated machinery in the MVR central kitchen has boosted the supply of semi-processed meat products to the Seafood "Zi Char" division.

1 Prices in S'pore seen moderating but likely to remain above pandemic levels in 2024, https://www.straitstimes.com/business/prices-in-s-pore-seen-moderating-but-likely-to-remain-above-pandemic-levels-in-2024

Aligned with the Government's Budget Meal Initiative launched in March 2023, which aims to provide Singaporeans with more affordable food options, we have introduced Budget Meals at most of our food stalls to help customers manage rising inflation and costs. Additionally, Kimly Zi Char offers more affordable options on food delivery platforms, ensuring that customers seeking the convenience of home delivery can still enjoy lower- cost meals. These efforts reflect our commitment to supporting the community during challenging economic times.

We place a strong emphasis on our customers' health, ensuring that our food offerings prioritise their well-being. Our central kitchens have adopted a reduced-sodium salt initiative, replacing regular salt with reduced sodium iodized salt, which contains approximately 30% less sodium. This adjustment is in tandem with the Government's sodium reduction campaign. By opting for lower-sodium alternatives, we aim to contribute to reducing the risks of high blood pressure, stroke, and heart disease without compromising the flavour of our offerings.

Additionally, we have partnered with the Health Promotion Board to develop and promote lower-calorie dishes across Kimly Dim Sum, Tenderfresh, and Kimly Mixed Rice outlets. To further support healthier choices, we introduced Nutri-Grade information for our range of beverages. Since December 2023, all our in-house drinks have undergone laboratory testing by professional nutritionists, and Nutri-Grade labels are now provided for consumers' reference.

Our commitment to offer a diverse dining experience for various market segments remains central to our strategy. This dedication is exemplified by the launch of our first air-conditioned food court at Lucky Plaza, catering to customers in the town area who prefer dining in a more comfortable environment. The vibrant food court features retro tiles and neon signs, creating a lively atmosphere, while hosting 12 unique food stalls that offer a wide variety of Southeast Asian cuisines. Building on the success of our first premium Lion City Dim Sum outlet at Lau Pa Sat, which was well-received by our customers, we have expanded with the addition of two outlets at prominent locations, Lucky Plaza and Sengkang Square. The brand continues to be celebrated for offering accessible and affordable casual dining experiences in the heart of the city.

Furthermore, the Group consistently strives for operational excellence by leveraging advanced technologies to enhance efficiency and boost productivity across all business functions. In February 2024, Kimly Zi Char launched its first Chinese New Year campaign, utilising QR codes to streamline the reconciliation and tracking of vouchers, gifts, and offers. This QR-enabled framework allows real-time promotion tracking and accurate data collection without increasing the workload for staff. We have also introduced self-service ordering kiosks for takeaway orders at our newer Tenderfresh restaurants, including Punggol Park, Punggol East, and Woodleigh Mall. These kiosks help streamline queue management and significantly reduce wait times.

Additionally, we have implemented a unique PayNow QR code generation system integrated with the Point-of-Sales ("POS") system at our Lucky Plaza outlet. This enables seamless and real-time payment processing, enhancing the customer experience. QR codes are generated directly by the POS during bill settlement and linked to the relevant payment gateways. Receipts are printed only upon request, reducing paper waste. As technology advances, we remain committed to leveraging these innovations to enhance the experience for all stakeholders.

Enhancing the physical environment and ambiance of our food outlets is crucial for improving the dining experience and maintaining our high hygiene standards. We continuously revitalise and rejuvenate our coffee shops, to uphold our unwavering commitment to deliver unique offerings and fresh experiences to our customers. In FY2024, three (3) of our existing coffee shops were refurbished under our Outlet Revitalisation Programme. One of the newly renovated coffee

shops at Block 237 Serangoon Avenue 3, known as Yu Xiang (裕

香), reopened in September 2024. It now features 13 food stalls offering diverse and affordable dishes, including KL Hotplate Curry Noodles and nasi lemak. The revamped coffee shop is appreciated for its comfortable environment and continues to attract regular patrons and new visitors. This initiative will continue to be a key strategy in elevating customer experiences and strengthening our market presence.

We have made steady progress in expanding our outlet network. Notably, we opened a new coffee shop at Block 187 Marsiling Road, featuring an outdoor refreshment area that provides diners with a bright, airy, and comfortable dining environment. Strategically located opposite Woodlands Secondary School and near Woodlands Checkpoint, the venue has quickly gained popularity due to its convenient location, diverse food choices, and affordable prices. Building on our strong reputation within the industry, we successfully opened three (3) new food outlets, 11 food stalls, and two (2) restaurants in FY2024, bringing our portfolio to 86 food outlets and 191 food stalls/restaurants/ kiosks. We have consistently attracted high-quality anchor tenants, fostering strong and enduring relationships over the years. Our managed food outlets have maintained a robust occupancy rate of 99.0% across a total of 617 food stalls, demonstrating the trust and confidence our tenants have in us.

In June 2024, we announced the proposed acquisition of a coffee shop property at Block 204 Serangoon Central, spanning 358 sqm, for a total consideration of S$13.15 million. This proposed acquisition will allow the Group to secure the long- term right-of-use for the property. Given the limited supply of long-term leasehold coffee shop properties for sale or lease, this move underscores our focus to secure strategic locations to support sustainable growth.

CONTINUE TO GROW BUSINESS IN HALAL MARKET

We recognise that staying competitive in the F&B industry demands constant innovation and adaptation to evolving consumer preferences. To stay ahead of shifting trends, we focus on Research & Development ("R&D"), allowing us to refine our product offerings to meet the needs of today's dynamic market. In FY2024, we introduced a gourmet line of Brioche Burgers at Tenderfresh, featuring rich buttered brioche buns paired with various patty options as well as guacamole and salsa toppings.

In response to increasing demand, Tenderfresh's Business Food Seasoning Manufacturing Arm, which produces premix flours, seasoning, spices and powdered food ingredients, has expanded its operations by moving into a new, upgraded central kitchen at 26 Senoko Way. This new facility, with its expanded production space of 500 sqm compared to the previous 129 sqm, significantly boosts our production and storage capacity. Additionally, it allows the Group to enter new markets, improve product quality, and increase efficiency, while creating more jobs to meet the growing demand.

ANNUAL REPORT 2024 06

Since the launch of Tenderfresh Makcik Tuckshop, featuring a modern café concept, it has received widespread positive reception from the public. Leveraging this success, the Group expanded its presence by opening its fourth and fifth Tenderbest Makcik Tuckshop at Kallang Bahru in December 2023 and Punggol Park in February 2024, respectively. The Punggol Park outlet is the Group's largest to date, boasting a spacious outdoor refreshment area of over 218 sqm and an internal dining space of more than 205 sqm. Nestled amidst lush greenery and overlooking a tranquil pond, it offers an unparalleled dining experience. We have continued our expansion efforts with the successful opening of two (2) restaurants and five (5) food stalls under the Tenderfresh brand in FY2024. Our efforts will further strengthen our market presence and remain in line with our ongoing strategy to grow our footprint and serve a wider customer base.

Singapore's halal food market is experiencing significant growth, driven by its multicultural population and status as a global trade and tourism hub. The increasing awareness of halal dietary needs among both Muslim and non-Muslim consumers has led to a sharp increase in demand for halal-certified products. This surge is further bolstered by the government's stringent halal compliance standards and certification processes, which have enhanced consumer confidence in the quality and authenticity of halal food offerings2.

Our entry into the halal food market through the acquisition of Tenderfresh in 2021 has proven to be a strategic move, aligning with the growing demand for halal-certified food. Moving forward, we plan to open more Tenderfresh food stalls across our network of coffee shops. With substantial untapped potential in the halal sector, we will continue to leverage Tenderfresh's strong brand reputation and industry presence to drive growth by further strengthening our position in this thriving market.

OUTLOOK

The ongoing manpower crunch has long been a critical challenge for the F&B industry, exacerbated by limitations in the local workforce and stringent foreign worker policies. These constraints have led to a shortage of skilled and reliable workers, resulting in increased wage costs to retain talent. To address these challenges, the Group has been actively streamlining and automating its operations. This includes integrating automated machinery in central kitchens, introducing ordering kiosks for takeaway orders and implementing a unique PayNow QR code generation system. These technological advancements enhance our operational efficiency and productivity, allowing us to direct our limited manpower to focus on more value-adding tasks.

In addition to the manpower shortage, F&B players in Singapore are facing escalating operating costs, driven by factors such as rising rental expenses, higher raw material prices and increased utility costs. These pressures significantly impact profitability, especially the cost of essential ingredients and energy-intensive kitchen operations continue to climb. To mitigate the impact of price hikes, we collaborate with a diverse group of suppliers instead of relying on a single source. This approach ensures a steady and cost-effective supply of produce and ingredients, minimising the effects of price fluctuations and disruptions in raw material availability, thereby protecting the Group's operations and profitability.

The Group remains focused on its growth strategy, aiming to expand its network of outlets across Singapore. We will continue to seek opportunities to open new outlets in strategic locations within mature estates that benefit from high foot traffic, thereby reinforcing our market presence and improving accessibility for a wider customer base.

In a rapidly changing industry, we recognise the importance of staying innovative and responsive to evolving consumer preferences to remain competitive. Looking ahead, the Group is committed to enhancing its competitive advantage by offering innovative products with R&D to meet the changing demands of our customers. While prioritising organic growth to expand our footprint, we will also pursue strategic mergers and acquisitions that will complement our existing businesses, to broaden our revenue streams and drive long-term growth.

2 Singapore Halal Food Market (2024 - 2030), https://www.6wresearch. com/industry-report/singapore-halalfood-market-outlook

MESSAGE TO SHAREHOLDERS

FINANCIAL PERFORMANCE

The Group achieved a revenue increase of 1.8%, reaching S$319.4 million in FY2024. This growth was driven by higher revenue contributions across the Food Retail, Outlet Management, and Outlet Investment divisions, resulting in a gross profit increase of S$1.7 million to S$90.6 million. The gross profit margin also improved slightly, rising by 0.1 percentage points to 28.4% in FY2024. However, the Group recorded a S$3.7 million drop in other operating income to S$2.9 million in FY2024. The decrease was mainly attributable to the absence of gain on disposal of the Confectionary Business, reversal of impairment loss on property, plant and equipment and lower government grants. Furthermore, administrative expenses increased by S$2.3 million from S$28.0 million in FY2023 to S$30.3 million in FY2024, largely due to higher depreciation of property, plant and equipment and right-of-use assets. Additionally, there was an increase in employee benefits expenses due to a larger headcount and across-the-board salary adjustment, along with higher professional fees and insurance expenses. As a result, the Group's net profit attributable to the owners of the Company decreased by 6.8% from S$34.0 million in FY2023 (excluding the gain on disposal of the Confectionary Business of S$2.5 million) to S$31.7 million in FY2024 (excluding the corporate income tax rebate of S$1.5 million).

Our balance sheet remains healthy. The Group generated an operating cash flow of S$87.7 million with cash and cash equivalents as of 30 September 2024 totalling S$98.5 million. As of the date of this report, the Group has utilised S$42.5 million of its IPO net proceeds resulting in a balance of S$0.9 million.

REWARDING SHAREHOLDERS

We deeply value the continued trust and support of our shareholders. As a token of appreciation, the Board is pleased to propose a final one-tier tax-exempt cash dividend of 1.00 Singapore cent per share for FY2024 at the upcoming annual general meeting. Together with the interim dividend of 1.00 Singapore cent per share, this brings the total dividend for FY2024 to 2.00 Singapore cents per share, if approved by shareholders at the upcoming annual general meeting on 23 January 2025. This payout represents a substantial 75.0%3 of the Group's net attributable profit for FY2024, underscoring our commitment to delivering value to our shareholders.

3 The payout ratio is calculated based on the unadjusted net profit after tax attributable to the owners of the Company of S$33.1 million.

SUSTAINABILITY

Our sustainability philosophy is grounded in the pillars of Economic, Social, and Environmental responsibility. By adopting a double materiality approach, where we evaluate both the financial implications of external factors on our business and the ways in which we can generate economic value, support communities, and minimise environmental impact throughout our value chain.

To attract and retain top talent, the Group provides comprehensive employee benefits that meet statutory requirements and align with industry standards. These initiatives underscore Kimly's commitment to fostering a caring, family-oriented corporate culture. Additionally, we are dedicated to optimising resource use and minimising waste across our operations, achieving cost efficiencies while reducing environmental impact and downstream waste.

The Group's FY2024 sustainability report will further illustrate our commitment to sustainable practices. This includes nurturing our workforce, supporting business partners, addressing customer needs, assisting underprivileged communities, minimising our environmental footprint, and maintaining integrity and transparency in our operations. These areas remain key priorities for the Board, which will continue to oversee and drive progress in these domains.

WITH GRATITUDE AND APPRECIATION

I would like to express my heartfelt gratitude to our management team and employees. Their unwavering dedication, passion, and commitment have been instrumental in driving the Group's sustained growth and success.

Mr. Chua Yong Chuan Kelvin and Ms. Lin Meiqi will be stepping down from their positions as Managing Director of Tenderfresh Group and Financial Controller, respectively, to pursue their personal and career interests. We sincerely thank them for their invaluable contributions over the years and extend our best wishes for their continued success in future endeavours.

We would also like to express our sincere thanks to our valued customers, esteemed business partners, food stall operators, trusted associates, dependable suppliers, and supportive shareholders for their unwavering trust and continuous support. As we continue to navigate challenges and explore new opportunities, we look forward to your continued partnership in building a brighter future together.