Results Briefing. Results for the second quarter ended 30 September November 2016

Transcription

1 Results Briefing Results for the second quarter ended 30 September November

2 Executive summary Financial highlights Operational updates 2

3 Executive summary % growth in net profit to S$16.1 million on steady revenue of S$376.9 million for H1 FY16/ This year s Hari Raya shifted forward a few weeks into early July, pulling festive buying into Q1 FY16/17; more representative to review financial numbers based on H1 FY16/17 vs. H1 FY15/16 Singapore continues to drive performance through cost efficiency and productivity measures 4 Malaysia expands to 66 stores, on track to hit 70 by end FY16/17; Indonesia opens two new stores, on track to hit nine by end FY16/17 5 To navigate well in a challenging environment, the Group will differentiate through value-added and end-to-end services and creating an enhanced online shopping experience for customers 3

4 Executive summary Financial highlights Operational updates 4

5 Financial summary and key financial ratios (S$m unless otherwise stated) Income statement Q2 FY1617 Q2 FY1516 H1 FY1617 H1 FY1516 Revenue Gross profit Net profit Basic EPS (cents) Fully diluted EPS (cents) Balance sheet As at 30 Sep 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 Q2 FY1617 Q2 FY1516 H1 FY1617 H1 FY1516 Net cash generated from / (used in) operating activities (4.1) 5.6 Net cash used in investing activities (1.1) (2.4) (3.8) (5.0) Net cash used in financing activities (0.1) (22.4) (61.6) (6.0) Notes: Q2, FY: Refers to the second(2nd) quarter from 1 July to 30 September and financial year from 1 April to 31 March respectively H1: Refers to the first (1st) half from 1 April to 30 September 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 September 2016 and the same period last year of 516,936,029 and 533,231,611 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 September 2016 and the same period last year of 521,502,029 and 533,724,011 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 516,650,654 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 Q2 FY16/17. 5

6 Revenue Revenue and EBIT margin Revenue (S$m) FY2015 FY2016 Q2 FY1516 Q2 FY1617 H1 FY1516 H1 FY1617 EBIT margin - % 6.1% 7.2% 8.6% 7.8% 8.2% 8.6% Sales by geography Sale of goods cash/credit mix S$m FY2015 FY2016 Q2 FY1516 Q2 FY1617 H1 FY1516 H1 FY1617 Singapore Malaysia Indonesia Notes: Q2: Refers to the second(2nd) quarter from 1 July to 30 September H1: Refers to the first (1st) half from 1 April to 30 September FY: Refers to the financial year from 1 April to 31 March Group 35.5% 35.1% 33.1% 34.0% 36.0% 36.8% 64.5% 64.9% 66.9% 66.0% 64.0% 63.2% FY 2015 FY 2016 Q2 FY1516 Q2 FY1617 H1 FY1516 H1 FY1617 Sale of goods - credit and earned service charge income % Sale of goods - cash % 6

7 Product range focused on 4 key segments Q2 FY1617 Electrical Products IT Products Furniture Services & Others % of Q2 FY1617 sale of goods 46.6% 30.7% 16.7% 6.0% 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 Revenue cash/credit mix Q2 FY1617 Malaysia Indonesia* Singapore Malaysia Indonesia* 17.4% 16.9% 18.8% 17.9% 10.5% 27.8% 24.4% 31.7% 72.7% 72.4% 59.4% 67.9% 82.6% 83.1% 81.2% 82.1% 89.5% 72.2% 75.6% 68.3% 27.3% 27.6% 40.6% 32.1% FY 2015 FY 2016 Q2 FY1516 Q2 FY1617 FY 2015 FY 2016 Q2 FY1516 Q2 FY1617 Sale of goods - credit and earned service charge income % Sale of goods - credit and earned service charge income % Sale of goods - cash % Sale of goods - cash % Notes: Q2, H1: Refers to the second(2nd) quarter from 1 July to 30 September and first (1st) half from 1 April to 30 September FY: Refers to the financial year from 1 April to 31 March * Sales for Indonesia commenced in Q3 FY14/15. FY 2015 FY 2016 Q2 FY1516 Q2 FY1617 Sale of goods - credit and earned service charge income % Sale of goods - cash % 7

8 Product range focused on 4 key segments H1 FY1617 Electrical Products IT Products Furniture Services & Others % of H1 FY1617 sale of goods 47.2% 29.2% 17.3% 6.3% 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 Revenue cash/credit mix H1 FY1617 Singapore Malaysia Indonesia* Malaysia Indonesia* 18.8% 17.9% 18.6% 20.1% 24.4% 31.7% 22.1% 31.8% 59.4% 67.9% 68.3% 70.8% 81.2% 82.1% 81.4% 79.9% 75.6% 68.3% 77.9% 68.2% 40.6% 32.1% 31.7% 29.2% Q2 FY1516 Q2 FY1617 H1 FY1516 H1 FY1617 Sale of goods - credit and earned service charge income % Q2 FY1516 Q2 FY1617 H1 FY1516 H1 FY1617 Sale of goods - credit and earned service charge income % Sale of goods - cash % Sale of goods - cash % Notes: Q2, H1: Refers to the second(2nd) quarter from 1 July to 30 September and first (1st) half from 1 April to 30 September FY: Refers to the financial year from 1 April to 31 March * Sales for Indonesia commenced in Q3 FY14/15. Q2 FY1516 Q2 FY1617 H1 FY1516 H1 FY1617 Sale of goods - credit and earned service charge income % Sale of goods - cash % 8

9 Operating metrics Sales per sq. ft. 1 Like-for-like sales growth 2 S$ 1, Singapore Singapore Singapore FY2015 FY2016 Q2 FY1516 Q2 FY1617 H1 FY1516 H1 FY % 2.5% % -0.8% % -3.1% -4.0% -4.4% -4.2% -3.7% -6.0% FY2015 FY2016 Q2 FY1516 Q2 FY1617 H1 FY1516 H1 FY % Exclude Corporate Sales Include Corporate Sales Malaysia MYR Malaysia FY2015 FY2016 Q2 FY1516 Q2 FY1617 H1 FY1516 H1 FY % 28.0% 17.6% 20.6% 20.8% 7.8% FY2015 FY2016 Q2 FY1516 Q2 FY1617 H1 FY1516 H1 FY % -2.7% Notes: -11.7% Q2: Refers to the second(2nd) quarter from 1 July to 30 September H1: Refers to the first (1st) half from 1 April to 30 September FY: Refers to the financial year from 1 April to 31 March Exclude Corporate Sales -14.5% -13.0% Include Corporate Sales 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% 9

10 Operating metrics Gross profit and margin 40.0% 32.8% 32.9% 35.3% 33.9% 34.9% 35.1% 35.0% 30.0% 25.0% % % S$m FY2015 FY2016 Q2 FY1516 Q2 FY1617 H1 FY1516 H1 FY % Note: Q2: Refers to the second(2nd) quarter from 1 July to 30 September H1: Refers to the first (1st) half from 1 April to 30 September FY: Refers to the financial year from 1 April to 31 March 10

11 Earned service charge income % 18.7% Group 20.0% 19.5% 20.5% 20.5% % 0 S$m 8.3% FY2015 FY2016 Q2 FY1516 Q2 FY1617 H1 FY1516 H1 FY1617 % of net sales Singapore^ 9.2% 9.0% 9.1% 10.3% Malaysia 39.3% 40.4% 40.1% 42.2% 41.7% 41.5% S$m FY2015 FY2016 Q2 FY1516 Q2 FY1617 H1 FY1516 H1 FY1617 % of net sales FY2015 FY2016 Q2 S$m FY1516 Q2 FY1617 H1 FY1516 H1 FY1617 Notes: Q2: Refers to the second(2nd) quarter from 1 July to 30 September H1: Refers to the first (1st) half from 1 April to 30 September 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 11

12 Breakdown of expenses and EBITDA Breakdown of expenses S$m Q2 FY1516 Q2 FY1617 H1 FY1516 H1 FY1617 Others Depreciation & amortisation Bank charges and professional fees Tracing and referencing Interest on loan Impairment loss on trade receivables Salaries and wages Rental on operating leases Distribution and marketing S$m 10.0% 9.2% EBITDA 2 Segment result by geographical location 3 9.6% 10.0% Q2 FY1516 Q2 FY1617 H1 FY1516 H1 FY1617 Adjusted EBITDA EBITDA Margin Notes: Q2, H1: Refers to the second(2nd) quarter from 1 July to 30 September and first (1st) half from 1 April to 30 September 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 S$m (2) (3) (4.2) (5.5) Q2 FY1516 Q2 FY1617 H1 FY1516 H1 FY1617 Singapore Malaysia Indonesia 3: Segment results are profit before other income, income tax and finance expense. 12

13 Delinquency rates and allowance for impairment loss on trade receivables Jul % 180+ days delinquency rates As the global outlook and development continues to be volatile, we will continue S$m Credit book assets - Gross Jul 07 Jul % Dec 07 May 08 Oct 08 Mar 09 Aug 09 Jan 10 Jun 10 Nov 10 Apr 11 Sep 11 Feb 12 Jul 12 Dec 12 May 13 Oct 13 Mar 14 Aug 14 Jan 15 Sep % Sep % Jun 15 Nov 15 Apr 16 Sep 16 to strengthen our focus and step up our efforts on credit and risk management of delinquent accounts to mitigate any impact to our portfolio impairment Note: PTCRI not significant Malaysia Singapore Mar-15 Mar-16 Sep-15 Sep-16 Allowance for impairment loss on trade receivables Singapore Malaysia 3.4% 3.1% 3.4% 2.8% Mar-15 Mar-16 Sep-15 Sep-16 Allowances for impairment loss on trade receivables (S$m) Notes: Month-Year: Refers to the financial position of each balance sheet item as at each period end Indonesia not significant Mar-15 Mar-16 Sep-15 Sep-16 Allowances for impairment loss on trade receivables (S$m) 13

14 Impairment loss on trade receivables charged to Income Statement Singapore Malaysia 4.8% 4.0% 3.4% 3.4% 1.7% 1.4% 2.1% 2.0% 0.9% 0.8% % 0.9% FY 2015 FY 2016 Q2 FY1516 Q2 FY1617 H1 FY1516 Impairment loss charged to Income Statement (S$m) H1 FY1617 FY 2015FY 2016 Q2 FY1516 Q2 FY1617 H1 FY1516 Impairment loss charged to Income Statement (S$m) H1 FY1617 Notes: Q2: Refers to the second(2nd) quarter from 1 July to 30 September H1: Refers to the first (1st) half from 1 April to 30 September FY: Refers to the financial year from 1 April to 31 March Indonesia not significant. Indonesia not significant 14

15 Working capital management Trade payable days Inventory days Days Days H1 FY1516 H1 FY H1 FY1516 H1 FY1617 Notes: H1: Refers to the first (1st) half period from 1 April to 30 September Q2: Refers to the second(2nd) quarter from 1 July to 30 September FY: Refers to the financial year from 1 April to 31 March 15

16 Borrowings Facility Facility amount Amount drawn down as at 30-Sep 16 Amount drawn down as at 30-Sep 15 Available headroom Multicurrency Medium Term Note (CAL) S$ 500 mil S$ %p.a. Expiry 15 th Mar 2019 (Previous bond of S$125 mil fully redeemed on 3 rd May 2016) S$ 125 mil Redeemed in 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 S$ 71.2 mil S$ 57.9 mil S$78.8 mil Syndicated Senior Loan (CMSB) Revolving Period expiring: Feb 2018 (with possibility of 1 year extension at lenders option) RM 535 mil RM 460 mil RM 415 mil RM 75 mil Various Term Loans (PTCRI) Various expiry dates ranging from 2017 to 2019 IDR bil IDR263.2 bil IDR138.9 bil _ 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. 16

17 Executive summary Financial highlights Operational updates 17

18 Singapore Operations Update Expanded digital & mobile services offering to five stores islandwide (Sep 2016) Refurbished Courts Toa Payoh (Sep 2016) 18

19 iphone 7 Launch (16 Sep 2016) Leading retailer in the non-telco space to be able to offer iphone 7 and 7 Plus on an islandwide scale Competitive cover services package bundle offer As covered in: 19

20 Courts Online Relaunch (Coming soon!)

21 Updates to Malaysia Store Portfolio New Refurbished Jitra, Kedah Sep 2016 Riyal, Sarawak Sep 2016 Kuala Kangsar, Perak Sep 2016 Plentong, Johor Aug stores as of Q2 FY16/17 ended 30 Sep Closures 2016 Bukit Gambir, Johor (Aug 2016) Bundusan, Kota Kinabalu (Aug 2016) New Pasir Tumboh, Kelantan Oct stores to date (10 Nov 2016) 21

22 Store Launches Ciledug, Tangerang City, and Ciputat, South Tangerang 20,000 square feet of retail space added Courts Indonesia on track to have nine stores by end FY16/17 22

23 Appendix 23

24 Unaudited Results for the quarter ended 30 September 2016 Group s revenue of $180.5 million for Q2 FY16/17 were 3.0% or $5.6 million lower than Q2 FY15/16. Singapore revenue which contributed to 65.5% of the Group s revenue in Q2 FY16/17 reported a marginal increase of 0.5% compared to Q2 FY15/16. Malaysia revenue, which contributed to 31.5% of the Group s revenue, reported 12.9% (in presentation currency) and 9.0% (in RM currency) decrease in Q2 FY16/17 as compared to Q2 FY15/16 mainly due to lower sales across all categories. Group Q2 Q2 % FY16/17 FY15/16 Change S$'000 S$'000 Revenue 180, ,139 (3.0) Cost of sales (119,301) (120,427) 0.9 Gross profit 61,246 65,712 (6.8) Other income and other gains/(losses) - net 1, Expenses - Distribution and marketing (12,794) (13,712) Administrative (35,425) (36,936) Finance (5,328) (7,162) 25.6 Profit before income tax 8,719 8,813 (1.1) Income tax expense (2,020) (2,795) 27.7 Net profit 6,699 6, Indonesia revenue, which contributed to 3.0% of the Group s revenue, registered a 70.2% (in presentation currency) and 35.8% (in Rupiah currency) increase in Q2 FY16/17 compared to Q2 FY15/16 mainly due to contributions from newly opened stores. Gross profit for Q2 FY16/17 decreased by 6.8% or $4.5 million resulting from lower revenue and gross profit margin compared to Q2 FY15/16. Gross profit margin decreased from 35.3% in Q2 FY15/16 to 33.9% in Q2 FY16/17 mainly a result of lower earned service charge income in Malaysia, lower merchandise margin for the Group and due to the shifting of Hari Raya festival into Q1 FY16/17. The lower merchandise margin for the Group was mainly due to higher corporate sales and lower furniture sales mix. Distribution and marketing expenses decreased by $0.9 million to $12.8 million in Q2 FY16/17 from $13.7 million in Q2 FY15/16. As a percentage of revenue, distribution and marketing expenses decreased to 7.1% in Q2 FY16/17 from 7.4% in Q2 FY15/16. 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 decreased by $1.5 million to $35.4 million in Q2 FY16/17 from $36.9 million in Q2 FY15/16. The decrease was mainly due to a reversal of overpayment on GST for previous years, but offset by higher impairment allowance of trade receivables in Malaysia and higher occupancy costs for new stores in Indonesia, Malaysia and Singapore. Finance expenses decreased by $1.9 million to $5.3 million in Q2 FY16/17 from $7.2 million in Q2 FY15/16 mainly due to lower exchange loss captured in Malaysia s books with the settlement of its Singapore dollar denominated intercompany loan and lower borrowings in Singapore, but offset by higher interest expenses in Indonesia due to increase in bank borrowings. Income tax expense of of $2.0 million for Q2 FY16/17 was based on taxable profit from Singapore and Malaysia operations (Q2 FY15/16: $2.8 million). The decrease in tax expense of $0.8 million mainly as a result of income tax credits from Indonesia s loss and lower taxable profit from Malaysia, and it was partially offset by higher taxable profit from Singapore operations. The effective tax rate for Q2 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 Q2 FY16/17 was an income of $4.1 million as compared to loss of $9.4 million in Q2 FY15/16. The improvement was mainly due to higher profit and lower translation loss mainly arising from translating Malaysia s results and financial position into Singapore dollar (presentation currency) as at 30 September

25 Unaudited Balance Sheet as at 30 September 2016 Cash and bank balances decreased by $70.9 million to $76.6 million as at 30 September 2016 from $147.5 million as at 31 March 2016 mainly as a result of repayment of the S$125 million 3-year unsecured fixed rate note in May 2016 and payment of dividends in August 2016, offset by additional drawdown in bank borrowings. The Group s trade and other receivables (current and non-current) increased by $16.7 million to $556.2 million as at 30 September 2016 from $539.5 million as at 31 March 2016 due to higher credit sales. Allowance for impairment of trade receivables as at 30 September 2016 was $25.2 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 to $85.6 million as at 30 September 2016 from $77.8 million as at 31 March 2016 due to stocking up for upcoming tradeshows in Singapore. 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. Derivative instrument is in a net liability position with the fair value loss in Q2 FY16/17 mainly attributed to the strengthening of Indonesia rupiah against Singapore dollar at the end of the financial reporting period. The total borrowings of $322.6million (31 March 2016: $371.2 million) consist of S$75 million 3-year unsecured 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 notes in May 2016 and offset by additional drawdown in bank borrowings. The decrease in net deferred income tax liabilities as at 30 September 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 September 2016 For the purposes of the consolidated statement of cash flows, the cash and cash equivalents comprise the following:- 26

27 Q&A To access the results presentation and briefing, please visit which will be available by 11 November