KUALA LUMPUR (Feb 6): Berjaya Food Bhd (BFood), which runs the Kenny Rogers Roasters (KRR) and Starbucks chains in Malaysia, reported a net profit of RM8.01 million in the second quarter ended Dec 31, 2019 (2QFY20), on a revenue of RM184.12 million.

There was no comparison numbers for the previous year's corresponding period, due to a change in its financial year-end from April 30 to June 30.

Nevertheless, BFood repeated in a stock exchange filing today as to what it previously said when it reported its 1QFY20 earnings, which was that it has been “adversely impacted by the adoption of the Malaysian Financial Reporting Standard 16 Leases (MFRS 16): Leases”.

It explained that MFRS 16 requires depreciation be charged on the right-of-use assets and interest expenses be incurred on lease liability instead of lease rental expenses, which is required by the previous accounting standard for leases, MFRS 117, to be charged out in profit and loss.

“In the current quarter under review and on the aggregate, the depreciation charge of right-of-use assets and the lease liability interest expense [is] higher than the total lease rental expenses. This resulted in a lower profit before tax, upon the adoption of MFRS 16.

“The profit before tax would have been RM15.01 million, if the total lease rentals of all the leased outlets were accounted for under the previous accounting standard for leases,” BFood said.

Its board of directors has recommended a second interim dividend of one sen per share in respect of FY2020, with the entitlement date fixed on March 12, and payment on March 26.

For its cumulative six-month period, BFood posted a net profit of RM12.62 million on a revenue of RM364.56 million.

Pre-tax profit came in at RM21.71 million, it said. “The profit before tax would have been RM25.79 million, if the total lease rentals of all the leased outlets were accounted for under the previous accounting standard for leases,” it noted.

On prospects, BFood said the group’s overall results for the remaining quarters of FY2020 will be adversely impacted by the adoption of MFRS 16, as almost all of the group’s operating outlets are on lease.

Still, it expects to mitigate this adverse impact with Berjaya Starbucks Coffee Company Sdn Bhd maintaining its revenue growth momentum, and the group expanding its income streams from its new franchise business, as well as its existing business.

“Based on the foregoing, it is anticipated that the operating results of the group will remain satisfactory in the remaining quarters,” it added.

BFood’s share price closed one sen or 0.78% lower at RM1.27 today, bringing a market capitalisation of RM451.66 million. The counter saw some 121,100 shares done.