Results Briefing. Results for the first quarter ended 30 June August 2016

Transcription

1 Results Briefing Results for the first quarter ended 30 June August

2 Executive summary Financial highlights Operational updates 2

3 Executive summary % growth in net profit to S$9.4 million for Q1 FY16/17, up from S$6.0 million in Q1 FY15/16, largely due to better margin management and cost reductions. EPS increases by 61.6%. 2 Festive buying aids strong credit sales in Singapore and Malaysia. 3 On track to open four smaller-format new stores in Indonesia and a minimum of six new stores in Malaysia. 4 Raya festive buying impact shifted forward into Q1 FY16/17. Expects credit collections to be challenging in next quarter in line with Malaysia macro environment. 5 Outlook: Consumer sentiment remains soft in the short term but we remain positive about the medium to longer term outlook. 3

4 Executive summary Financial highlights Operational updates 4

5 Financial summary and key financial ratios (S$m unless otherwise stated) Income statement Q1 FY1617 Q1 FY1516 Revenue Gross profit Net profit Basic EPS (cents) Fully diluted EPS (cents) Balance sheet As at 30 Jun 2016 As at 31 Mar 2016 Cash and bank balances Trade and other receivables Borrowings NAV per ordinary share (cents) Statement of cash flows 4 Q1 FY1617 Q1 FY1516 Net cash used in operating activities (20.5) (8.4) Net cash used in investing activities (2.7) (2.6) Net cash (used in) / provided by financing activities (61.5) 16.6 Notes: Q1, FY: Refers to the first(1st) quarter from 1 April to 30 June and financial year from 1 April to 31 March respectively 1: Basic earnings per share is calculated by dividing the Group's profit after tax attributable to shareholders by the weighted average ordinary shares during the three months ended 30 June 2016 and the same period last year of 521,386,919 and 538,186,540 respectively. 2: Diluted earnings per share is calculated by dividing the Group's profit after tax attributable to shareholders by the weighted average ordinary shares during the three months ended 30 June 2016 and the same period last year of 525,297,919 and 538,678,940 respectively. 3: Net asset value (for the issuer and group) per ordinary share based on the total number of issued shares excluding treasury shares of the issuer at the end of the current financial year reported on and immediately preceding financial year of 519,526,066 and 522,692,346 respectively. 4: Comparative figures for statement of cash flows have been reclassified to be consistent with the presentation of the Group for the period ended Q1 FY16/17. 5

6 Revenue Revenue and EBIT margin Revenue (S$m) FY2015 FY2016 Q1 FY1516 Q1 FY1617 EBIT margin - % 6.1% 7.2% 7.9% 9.4% S$m Sales by geography Sale of goods cash/credit mix Group 35.4% 35.1% 38.7% 39.5% FY2015 FY2016 Q1 FY1516 Q1 FY1617 Singapore Malaysia Indonesia Notes: Q1: Refers to the first(1st) quarter from 1 April to 30 June FY: Refers to the financial year from 1 April to 31 March 64.6% 64.9% 61.3% 60.5% FY 2015 FY 2016 Q1 FY1516 Q1 FY1617 Sale of goods - credit and earned service charge income % Sale of goods - cash % 6

7 Product range focused on 4 key segments Electrical Products IT Products Furniture Services & Others % of Q1 FY1617 sale of goods 47.8% 27.7% 17.9% 6.6% Major White Goods Vision Small appliances Audio Computers Accessories Photography Mobile Mattresses Bedroom furniture Dining room furniture Living room furniture Home office products Warranty sales Other services Product replacement services Connect telecommunications subscription plans Singapore Revenue cash/credit mix Malaysia Indonesia* 17.4% 16.9% 18.4% 22.3% 10.5% 27.8% 20.0% 31.9% 72.7% 72.4% 76.6% 73.4% 82.6% 83.1% 81.6% 77.7% 89.5% 72.2% 80.0% 68.1% 27.3% 27.6% 23.4% 26.6% FY 2015 FY 2016 Q1 FY1516 Q1 FY1617 Sale of goods - credit and earned service charge income % Sale of goods - cash % FY 2015 FY 2016 Q1 FY1516 Q1 FY1617 Sale of goods - credit and earned service charge income % Sale of goods - cash % FY 2015 FY 2016 Q1 FY1516 Q1 FY1617 Sale of goods - credit and earned service charge income % Sale of goods - cash % Notes: Q1: Refers to the first(1st) quarter from 1 April to 30 June FY: Refers to the financial year from 1 April to 31 March * Sales for Indonesia commenced in Q3 FY14/15. 7

8 Operating metrics Sales per sq. ft. 1 Like-for-like sales growth 2 S$ 1, Singapore Like-For-Like Sales Growth Singapore FY2015 FY2016 Q1 FY1516 Q1 FY % 2.5% -0.2% -1.8% -3.5% -3.1% -3.3% FY2015 FY2016 Q1 FY1516 Q1 FY1617 MYR Malaysia % Exclude Corporate Sales Include Corporate Sales Like-For-Like Sales Growth Malaysia FY2015 FY2016 Q1 FY1516 Q1 FY % 12.7% 7.8% 9.4% 6.9% 4.0% FY2015 FY2016 Q1 FY1516 Q1 FY % Notes: Q1: Refers to the first(1st) quarter from 1 April to 30 June Exclude Corporate Sales Include Corporate Sales FY: Refers to the financial year from 1 April to 31 March 1: Based on weighted average retail square footage and sale of goods from stores for each period, excluding sales from events held outside stores 2: Like-for-like sales (net merchandise sales and current quarter/year service charge income generated) growth for a financial quarter/year is calculated based on stores which had been operating for the entire quarter/year over that particular quarter/year and the entire same period over the preceding year Indonesia not significant -11.7% 8

9 Operating metrics Gross profit and margin 32.8% 32.9% 34.5% 36.1% 40.0% 35.0% 30.0% 25.0% % % S$m FY2015 FY2016 Q1 FY1516 Q1 FY % Note: Q1: Refers to the first(1st) quarter from 1 April to 30 June FY: Refers to the financial year from 1 April to 31 March 9

10 Earned service charge income % 18.7% Group 20.9% 21.3% S$m Singapore^ FY2015 FY2016 Q1 FY1516 Q1 FY1617 % of net sales 11.6% 39.3% 40.4% Malaysia 43.3% 41.0% 7.9% 8.3% 9.1% S$m FY2015 FY2016 Q1 FY1516 Q1 FY1617 S$m FY2015 FY2016 Q1 FY1516 Q1 FY1617 % of net sales Notes: Q1: Refers to the first(1st) quarter from 1 April to 30 June FY: Refers to the financial year from 1 April to 31 March ^ Excludes Net Sales from Home Lifestyle as there is no earned service charge income yet for Home Lifestyle Indonesia not significant % of net sales 10

11 Breakdown of expenses and EBITDA Breakdown of expenses S$m Q1 FY1516 Q1 FY1617 Others Depreciation & amortisation Bank charges and professional fees Tracing and referencing Interest on loan Impairment loss on trade receivables Salaries and wages Rental on operating leases Distribution and marketing S$m 11.0% 10.5% 10.0% 9.5% 9.0% 8.5% 8.0% 9.3% 18 Q1 FY1516 Adjusted EBITDA EBITDA 2 Segment result by geographical location % Notes: Q1: Refers to the first(1st) quarter from 1 April to 30 June FY: Refers to the financial year from 1 April to 31 March 1: Others include head office costs and other expenses 2: EBITDA calculated as profit before tax add finance expense and depreciation and amortisation expense 21 Q1 FY1617 EBITDA Margin S$m : Segment results are profit before other income, income tax and finance expense (2) (3) Q1 FY1516 Q1 FY1617 Singapore Malaysia Indonesia 11

12 Delinquency rates and allowance for impairment loss on trade receivables Jul % Jul % 180+ days delinquency rates Jun % Jun % Jul 07 Oct 07 Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Jan 10 Apr 10 Jul 10 Oct 10 Jan 11 Apr 11 Jul 11 Oct 11 Jan 12 Apr 12 Jul 12 Oct 12 Jan 13 Apr 13 Jul 13 Oct 13 Jan 14 Apr 14 Jul 14 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 With global developments remaining uncertain and local economic conditions challenging, we continue to be diligent in our credit and significantly strengthening our collections resources and efforts to step-up our focus on managing delinquent accounts as we anticipate some impact to our portfolio impairment S$m Credit book assets - Gross Note: PTCRI not significant Malaysia Singapore FY 2015 FY 2016 Q1 FY1516 Q1 FY1617 Allowance for impairment loss on trade receivables 7.6 S$m % % 6.5 Singapore Notes: Q1: Refers to the first(1st) quarter from 1 April to 30 June FY: Refers to the financial year from 1 April to 31 March Indonesia not significant 3.4% % 6.1 FY 2015 FY 2016 Q1 FY1516 Q1 FY1617 Allowances for impairment loss on trade receivables (S$m) % of trade receivables at balance sheet date 3.8% 3.3% 2.8% 2.3% 1.8% S$m 16.4 Malaysia FY 2015 FY 2016 Q1 FY1516 Q1 FY1617 Allowances for impairment loss on trade receivables (S$m) % of trade receivables at balance sheet date 12

13 Impairment loss on trade receivables charged to Income Statement Singapore 1 Malaysia 4.8% 4.0% 3.4% 3.4% % 0.6% % 1.1% FY 2015 FY 2016 Q1 FY1516 Q1 FY1617 S$m Impairment loss charged to Income Statement (S$m) Impairment loss on trade receivables as a percentage of average portfolio FY 2015 FY 2016 Q1 FY1516 Q1 FY1617 S$m Impairment loss charged to Income Statement (S$m) Impairment loss on trade receivables as a percentage of average portfolio Notes: Q1: Refers to the first(1st) quarter from 1 April to 30 June FY: Refers to the financial year from 1 April to 31 March Indonesia not significant 13

14 Working capital management Trade payable days Inventory days Days Days Q1 FY1516 Q1 FY Q1 FY1516 Q1 FY1617 Notes: Q1: Refers to the first(1st) quarter from 1 April to 30 June FY: Refers to the financial year from 1 April to 31 March 14

15 Borrowings Facility Facility amount Interest rate Amount drawn down as at 30-Jun 16 Available headroom Multicurrency Medium Term Note (CAL) S$ 500 mil Fixed 5.75% p.a. S$ 75 mil Expiry 15 th Mar 2019 (Previous bond of S$125 mil fully redeemed on 3 rd May 2016) S$ 425 mil Asset Securitisation Programme (CSPL) Revolving Period expiring: Jan 2019 (with possibility of 1 year extension at lenders option) S$ 150 mil 1-mth SOR (1) + spread (Spread reduced by more than 120 bps) S$ 60.4 mil S$89.6 mil Syndicated Senior Loan (CMSB) Revolving Period expiring: Feb 2018 (with possibility of 1 year extension at lenders option) Term Loan (2 years) (PTCRI) Expiring: 2017 (Jan, Apr, July, Oct 2017 for each tranche respectively) Term Loan (3 years) (PTCRI) Expiring: May 2019 RM 535 mil IDR bil (4 tranches of IDR46.3 bil each) IDR 78 bil (another IDR 22 bil cancelled as capex expenditure for KHI and BSD less than original projection) 1-mth KLIBOR (2) + spread (spread reduced from 2.6% to 2.1%) RM 451 mil RM 84 mil 10.7% p.a. IDR185.2 bil 0 Bank s Term Lending rate minus 3.15% p.a. (i.e % p.a. based on current Term Lending Rate) IDR78bill 0 1 CSPL Asset Securitisation : 1-mth SOR is hedged with Interest Rate Cap (strike rate of 2.5%) for notional amount of SGD70M 2 CMSB Syndicated Senior Loan: RM 267.5M is fixed at 6.35% p.a. 15

16 Executive summary Financial highlights Operational updates 16

17 NTUC LinkPoints Membership (Apr 2016) Courts collaborated with NTUC Link, one of the island s largest consumer rewards programmes Courts HomeClub Elite Members earn LinkPoints when they spend with Courts 17

18 Courts Megastore Grand Relaunch (Aug 2016) Revamped range of small domestic appliances at new Markethall New repair and trade-in counter on Level 3 18

19 Courts Design Studio Extended Ciseern's exclusive partnership with Courts Design Studio Will expand Ciseern's concept areas into three other stores, Courts Ang Mo Kio, Causeway Point and Toa Payoh by end Aug

20 Malaysia new store makeovers in Q1 FY16/17 Relaunched Courts Sri Damansara Megastore on 4 Jun 2016 with tenant Decathlon in line with improving store productivity Relocated existing store to Courts Puchong Permai on 12 Jun

21 Malaysia Lisa Surihani & Harith Iskander Brand Campaign Courts Memang senang! brand campaign launched 1 Apr 2016 with beloved local celebrities 21

22 Kota Harapan Indah Megastore Relaunch (Jun 2016) Courts Kotah Harapan Indah Megastore relaunched on 23 Jun 2016 to include existing anchor tenant Super Indo and new tenants Funworld and Bakmi RN Midnight shopping sales around launch organised for shoppers 22

23 Appendix 23

24 Unaudited Results for the quarter ended 30 June 2016 Group s revenue of $196.3 million for Q1 FY16/17 were 0.9% or $1.8 million lower than Q1 FY15/16. Singapore revenue which contributed to 63.8% of the Group s revenue in Q1 FY16/17 reported a marginal decrease of 0.3% compared to Q1 FY15/16. Group Q1 Q1 % FY16/17 FY15/16 Change S$'000 S$'000 Malaysia revenue, which contributed to 33.1% of the Group s revenue, reported 5.8% (in presentation currency) decrease but 1.7% (in RM currency) increase in Q1 FY16/17 as compared to Q1 FY15/16 mainly due to depreciation of RM currency against Singapore dollar. Indonesia revenue, which contributed to 3.1% of the Group s revenue, registered a 66.1% (in presentation currency) and 106.6% (in Rupiah currency) increase in revenue as compared to Q1 FY15/16 mainly due to contributions from newly opened stores. Revenue 196, ,152 (0.9) Cost of sales (125,453) (129,832) 3.4 Gross profit 70,878 68, Other income and other gains - net 1,450 1, Expenses - Distribution and marketing (14,980) (16,554) Administrative (38,804) (37,103) (4.6) - Finance (5,766) (6,997) 17.6 Profit before income tax 12,778 8, Income tax expense (3,362) (2,638) (27.4) Gross profit increased by 3.7% or $2.6 million on the back of lower cost of sales. Gross profit margin increased from 34.5% in Q1 FY15/16 to 36.1% in Q1 FY16/17. The increase in gross profit margin was mainly due to an increase in merchandise margin. Distribution and marketing expenses decreased from $16.6 million in Q1 FY15/16 to $15.0 million in Q1 FY16/17. As a percentage of revenue, distribution and marketing expenses decreases from 8.4% in Q1 FY15/16 to 7.6% in Q1 FY16/17. This decrease was primarily attributable to lower advertising cost and the continuous efforts in improving the management of warehouse and distribution cost in Malaysia. Administrative expenses for the quarter were $38.8 million, an increase of $1.7 million from $37.1 million in Q1 FY15/16. The increase was mainly due to higher occupancy costs for new stores in Indonesia and higher accrued bonus. The increase was partially offset by lower impairment allowance of trade receivables and lower general expenses achieved from the continuous cost saving initiatives. Finance expenses decreased by $1.2 million from $7.0 million in Q1 FY15/16 to $5.8 million in Q1 FY16/17 mainly due to lower exchange loss captured in Malaysia s books with the settlement of its Singapore dollar denominated inter-company loan. Net profit 9,416 6, Income tax expense of $3.4 million for Q1 FY16/17 was based on taxable profit from Singapore and Malaysia operations (Q1 FY15/16: $2.6 million). The increase in tax expense of $0.7 million mainly as a result of higher taxable profit from Singapore operations, partially offset by income tax credits from Indonesia s loss. The effective tax rate for Q1 FY16/17 was higher than the Singapore statutory tax rate of 17.0% mainly due to higher tax rate in Malaysia and non-tax deductible expenses. Total comprehensive income for Q1 FY16/17 was an income of $4.2 million as compared to loss of $1.2 million in Q1 FY15/16. The improvement was mainly due to higher profit and lower translation loss arising from translating Malaysia s results and financial position into Singapore dollar (presentation currency) as at 30 June

25 Unaudited Balance Sheet as at 30 June 2016 Group 30 Jun Mar 16 S$'000 S$'000 ASSETS Current assets Cash and bank balances 61, ,509 Trade and other receivables 248, ,178 Inventories 87,019 77,815 Current income tax recoverable , ,930 Non-current assets Derivative financial instruments Trade and other receivables 301, ,327 Investments in subsidiaries - - Property, plant and equipment 24,886 24,792 Intangible assets 23,388 23,580 Deferred income tax assets 6,155 4, , ,492 Total assets 754, ,422 LIABILITIES Current liabilities Derivative financial instruments Trade and other payables 129, ,293 Current income tax liabilities 5,349 3,506 Borrowings 10, ,036 Deferred income 2,825 2, , ,462 Non-current liabilities Derivative financial instruments Trade and other payables Borrowings 299, ,151 Deferred income 2,156 2,614 Deferred income tax liabilities 7,928 7, , ,096 Total liabilities 459, ,558 NET ASSETS 294, ,864 EQUITY Share capital 265, ,332 Treasury shares (17,239) (16,161) Other reserves (42,093) (36,822) Retained profit 88,931 79,515 Total equity 294, ,864 Cash and bank balances decreased by $85.9 million from $147.5 million as at 31 March 2016 to $61.6 million as at 30 June 2016 mainly as a result of repayment of the S$125 million 3-year unsecured fixed rate note in May 2016, cash used in operating activities and fixed assets additions, which was offset with net proceeds from borrowings. The Group s trade and other receivables (current and non-current) increased by $11.2 million from $539.5 million as at 31 March 2016 to $550.7 million as at 30 June 2016 due to higher credit sales. Allowance for impairment of trade receivables as at 30 June 2016 was $24.9 million as compared to $24.2 million as at 31 March 2016 representing 4.1% of trade receivables at both period ends. The Group s inventories increased from $77.8 million to $87.0 million due to stocking up for Hari Raya festive season. The Group s trade and other payables (current and non-current) decreased by $10.2m million from $139.8 million as at 31 March 2016 to $129.6 million as at 30 June 2016 mainly due to decrease of accrued operating expenses with the payout of bonuses and payments to suppliers. Derivative financial instruments represent the carrying amount of interest rate and currency swaps that the Group has entered into to hedge its exposure to floating interest rate and exchange rate fluctuations on its bank borrowings. The Group has adopted hedge accounting in respect of the derivative financial instruments it has entered into in FY14/15. The fair value loss in Q1 FY16/17 resulted in a net liability position for derivative instrument mainly attributed to the strengthening of Indonesia rupiah against Singapore dollar at the end of the financial reporting period. The total borrowings of $310.8 million (31 March 2016: $371.2 million) consist of fixed rate notes and term loan in Courts Asia Ltd ( CAL ), the Asset Securitisation Programme 2016 in Singapore, Syndicated Senior Loan in Malaysia, and term loans in Indonesia. The decrease was mainly due to the repayment of the S$125 million 3-year unsecured fixed rate note in May 2016 and offset with additional drawdown of the Asset Securitisation Programme 2016 in Singapore. The decrease in net deferred income tax liabilities as at 30 June 2016 was mainly due to increase in deferred tax assets arising from tax losses from Indonesia subsidiary. 25

26 Unaudited Statement of Cash Flows for the quarter ended 30 June 2016 Group Q1 Q1 FY16/17 FY15/16 S$'000 S$'000 Cash flows from operating activities: Net profit 9,416 6,044 Adjustments for: Income tax expense 3,362 2,638 Depreciation and amortisation 3,362 3,277 Amortisation of deferred income (627) (590) Interest expense 5,217 5,115 Interest income (849) (651) Amortisation of borrowing costs Loss on disposal of property, plant and equipment (net) Share-based compensation Foreign currency translation differences (241) (1,782) Operating cash flow before working capital changes 20,284 14,568 Changes in working capital Inventories (9,959) (3,933) Trade and other receivables (19,699) (23,977) Trade and other payables (9,359) 5,569 Cash used in operations (18,733) (7,773) Income tax paid (net) (1,787) (590) Net cash used in operating activities (20,520) (8,363) Cash flows from investing activities Additions to property, plant and equipment (3,330) (2,928) Acquisition of intangible assets (219) (288) Proceeds from sale of property, plant and equipment 3 - Interest received Net cash used in investing activities (2,719) (2,585) Cash flows from financing activities Repayment of bond issued (125,120) - Repayment of finance lease liabilities (225) (408) Proceeds from term loan 7,883 5,192 Repayment of term loan (94) (115) Proceeds from syndicated senior loan 2,229 1,677 Proceeds from loan received on asset securitisation 58,378 15,804 Decrease / (Increase) in fixed deposits pledged as securities for bankin 794 (1,290) Purchase of treasury shares (1,232) (71) Interest paid (4,142) (4,139) Net cash (used in) / provided by financing activities (61,529) 16,650 Net (decrease) / increase in cash and cash equivalents (84,768) 5,702 Cash and cash equivalents as at beginning of financial period 141, ,383 Effects of currency translations on cash and bank balances (342) (2,021) Cash and cash equivalents as at end of financial period 56, ,064 For the purposes of the consolidated statement of cash flows, the cash and cash equivalents comprise the following:- 30 Jun Jun 15 S$'000 S$'000 Cash and bank balances 43,734 62,179 Fixed deposits 17,871 57,011 61, ,190 Less: Fixed deposits pledged as securities for banking facilities (4,945) (3,126) Cash and cash equivalents per consolidated statement of cash flows 56, ,064 26

27 Q&A To access the results presentation and briefing, please visit which will be available by 17 August