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Government subsidies help Hong Kong fast-food firm Cafe de Coral avoid first-half losses

  • Company’s net profit rose by 8.4 per cent to HK$162.3 million, thanks to HK$338.9 million in monetary relief
  • We fully paid government’s Employment Support Scheme funds to staff in Hong Kong, CEO says

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Cafe de Coral’s revenue was affected by the coronavirus pandemic and sank by 24.3 per cent in the six months ended September 30. Photo: K Y Cheng
Lam Ka-sing

Government subsidies have helped fast-food chain operator Cafe de Coral Holdings avoid a loss in the six months ended September 30.

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The company said on Thursday in a filing to the stock exchange that its net profit rose by 8.4 per cent year on year to HK$162.3 million (US$20.9 million), thanks to HK$338.9 million in monetary relief provided by the Hong Kong government. Without the subsidies, the company would have reported a loss before income tax of about HK$156 million, as opposed to a profit before income tax of HK$183 million.

Hong Kong has unveiled many rounds of subsidies for companies and workers battered by the pandemic, including HK$80 billion in a second tranche of the Employment Support Scheme that covers the September to November period.

Cafe de Coral accessed HK$322.52 million under Hong Kong’s Employment Support Scheme and HK$7.85 million under the Anti-epidemic Fund of the Hong Kong Government, among other subsidies, some of them from the mainland Chinese government as well.

“We fully paid the government’s [Employment Support Scheme funds] to staff in Hong Kong [as salaries], which … occupies about 31.6 per cent of staff cost in Hong Kong,” said Peter Lo, the company’s chief executive. “The government subsidies indeed gave us breathing space.”

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Cafe de Coral’s revenue was severely affected by the coronavirus pandemic during the six-month period and sank by 24.3 per cent to HK$3.2 billion as compared with the same period last year. The company declared an interim dividend of 10 HK cents per share for this period on Thursday, down by almost half from the 19 HK cents declared during the same period last year. Lo said the total dividend amounted to about HK$59 million only, which was not a lot given the company’s current cash position.
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