Results Briefing. Results for the Financial Year ended 31 March 2017

Transcription

1 Results Briefing Results for the Financial Year ended 31 March 2017

2 Agenda 2 Executive Summary 1 2 Financial highlights Operational updates 3 4 FRS 115 adoption

3 EXECUTIVE SUMMARY

4 Executive summary 4 1 Achieved S$23.7m net profit in FY16/17 on the back of increase in gross profits and better cost management 2 Adopted new SG Financial Reporting Standard 115 Revenue from Contracts with Customers for FY16/17 financial statements 3 Added seven and three new stores in Malaysia and Indonesia respectively, bringing total store footprint for the Group to 92 4 FY17/18 plans to leverage growth levers to expand solutions selling, transform offline stores into experience centres and drive omni-channel execution 5 Proposed final dividend of 1.29 cents per ordinary share, consistent with last two financial years

5 FINANCIAL HIGHLIGHTS

6 Financial summary and key financial ratios 6 (S$m unless otherwise stated) 4 Income statement YTD YTD YTD Revenue Gross profit Net profit Basic EPS (cents) Fully diluted EPS (cents) As at 31 Mar 2016 As at 31 Mar 2016 Balance sheet As at 31 Mar Cash and bank balances Trade and other receivables Unearned service charges Deferred Revenue (Net) Borrowings NAV per ordinary share (cents) Statement of cash flows 4 YTD YTD YTD Net cash generated from operating activities Net cash used in investing activities (6.6) (10.0) (10.0) Net cash used in financing activities (85.7) Notes: 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 12 months ended 31 March 2017 and the same period last year of 516,847,856 and 530,377,235 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 12 months ended 31 March 2017 and the same period last year of 525,363,956 and 534,473,235 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 513,722,888 and 522,692,346 respectively. 4: The FY15/16 comparative figures have been restated to take into account (i) the retrospective adjustments arising from the adoption of FRS 115 Revenue From Contracts With Customers (ii) there is reclassification of expense line items which has no impact on Group s profit before tax or net profit arising from these reclassification [Q4, FY: Refers to the forth (4th) quarter from 1 January to 31 March and financial year from 1 April to 31 March respectively]

7 Revenue [4: Comparative figures have been restated been restated to take into account the retrospective adjustments arising from the adoption of FRS 115 Revenue From Contracts With Customers to be consistent with the presentation of the Group for the period ended 31 March ] 7 Revenue (S$m) 770 Revenue and EBIT margin EBIT margin - % 7.2% 5.0% 7.1% S$m Singapore^ MYR m Malaysia 7.9% 8.6% 5.1% % 2.3% Notes: Revenue EBIT % FY: Refers to the financial year from 1 April to 31 March ^ Singapore Revenue and EBIT margin includes COURTS Singapore and Home Lifestyle [Q4: Refers to the forth(4th) quarter from 1 January to 31 March] Revenue EBIT %

8 Revenue 8 Sales by geography Sale of goods cash/credit mix S$m % 33.6% 34.9% % 66.4% 65.1% FY 2016 FY 2016 FY 2017 FY 2016 FY 2016 FY 2017 Singapore Malaysia Indonesia Sale of goods - credit and earned service charge income % Sale of goods - cash % Notes: FY: Refers to the financial year from 1 April to 31 March The FY15/16 comparative figures have been restated to take into account (i) the retrospective adjustments arising from the adoption of FRS 115 Revenue From Contracts With Customers and (ii) reclassification of expense line items. [Q4: Refers to the forth(4th) quarter from 1 January to 31 March]

9 Product range focused on 4 key segments 9 Electrical Products IT Products Furniture Other Services % of FY1617 sale of goods 45.8% 31.2% 16.9% 6.1% Major White Goods Vision Small appliances Audio Computers Accessories Photography Mobile Mattresses Bedroom furniture Dining room furniture Living room furniture Home office products Other services - Product replacement services - Cleaning - Installation - Repairs Warranty sales Connect Telco subscription plans Revenue cash/credit mix Indonesia* Singapore Malaysia Indonesia* 16.9% 16.7% 18.2% 72.4% 71.0% 71.4% 27.8% 27.8% 35.0% 83.1% 83.3% 81.8% 72.2% 72.2% 65.0% 27.6% 29.0% 28.6% FY 2016 FY 2016 FY 2017 Sale of goods - credit and earned service charge income % Sale of goods - cash % Notes: FY: Refers to the financial year from 1 April to 31 March * Sales for Indonesia commenced in Q3 FY1415. [Q4: Refers to the forth(4th) quarter from 1 January to 31 March] FY 2016 FY 2016 FY 2017 Sale of goods - credit and earned service charge income % Sale of goods - cash % FY 2016 FY 2016 FY 2017 Sale of goods - credit and earned service charge income % Sale of goods - cash %

10 Operating metrics 10 Sales per sq. ft. 1 Like-for-like sales growth 2 S$ Singapore Singapore Singapore 1,081 1,079 1, % -1.0% -0.8% MYR 733 Malaysia % Exclude Corporate Sales Include Corporate Sales Malaysia 17.6% 7.8% Exclude Corporate Sales Include Corporate Sales Notes: FY: Refers to the financial year from 1 April to 31 March 1: Based on weighted average retail square footage and total net sale for each period 2: Like-for-like sales (net merchandise sales and current year service charge income generated) growth for a financial year is calculated based on stores which had been operating for the entire year over that particular year and the entire same period over the preceding year. like-for-like sales is based on sales figures as previously reported in and FY2015. like-for-like sales is based on sales compared with restated sales figures. Indonesia not significant -3.3% -4.1%

11 Operating metrics 11 Gross profit and margin 36.3% 40.0% 33.0% 33.8% 35.0% 30.0% 25.0% % 15.0% S$m 10.0% Note: FY: Refers to the financial year from 1 April to 31 March The FY15/16 comparative figures have been restated to take into account (i) the retrospective adjustments arising from the adoption of FRS 115 Revenue From Contracts With Customers (ii) there is reclassification of expense line items which has no impact on Group s profit before tax or net profit arising from these reclassification [Q4: Refers to the fourth (4th) quarter from 1 January to 31 March]

12 Service charge income Earned SCI Group Unearned SCI Group % % 11.3% S$m % of net sales S$m Mar-16 Mar-16 Mar % Earned SCI Singapore^ 40.4% Earned SCI Malaysia 24.5% 27.8% Earned SCI Indonesia 1 9.0% 9.9% 6.0% % 3.9% S$m % of net sales % of net sales Notes: FY: Refers to the financial year from 1 April to 31 March ^ Excludes Net Sales from Home Lifestyle as there is no earned service charge income yet for Home Lifestyle Indonesia not significant Q4: Refers to the forth(4th) quarter from 1 January to 31 March S$m S$m % of net sales 1. Indonesia has yet to announce the adoption of IFRS15 Revenue from Contracts with Customers. Adjustment is made at consolidation level to be aligned with the Group s accounting standards.

13 Deferred revenue (net) 13 Group S$m NIL 0.0 Singapore Malaysia S$m S$m NIL NIL Notes: FY: Refers to the financial year from 1 April to 31 March Deferred revenue (net) is deferred revenue net less deferred costs Indonesia s sale Q4: Refers to the forth(4th) quarter from 1 January to 31 March

14 Breakdown of expenses and EBITDA 14 S$m Breakdown of expenses S$m 9.0% 8.5% 8.0% 7.5% 7.0% 6.5% 6.0% 5.5% 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Adjusted EBITDA EBITDA Margin Notes: FY: Refers to the financial year from 1 April to 31 March Q4: Refers to the Forth(4th) quarter from 1 January to 31 March FY Mar 2016 FY Mar 2016 Others Depreciation & amortisation Bank charges and professional fees Tracing & referencing Interest on loan Impairment loss on trade receivables Salaries and wages Rental on operating leases Distribution and marketing Note: There is reclassification of expense line items which has no impact on Group s profit before tax or net profit arising from these reclassification 8.6% 66 EBITDA 2 Segment result by geographical location 3 6.4% % S$m (8) (8) (11) Singapore Malaysia Indonesia 1: Others include head office costs and other expenses 2: EBITDA calculated as profit before tax add finance expense and depreciation and amortisation expense 3: Segment results are profit before other income, income tax and finance expense.

15 Delinquency rates and allowance for impairment loss on trade receivables 15 Jul % Jul % 180+ days delinquency rates Jul 07 Nov 07 Mar 08 Jul 08 Nov 08 Mar 09 Jul 09 Nov 09 Mar 10 Jul 10 Nov 10 Mar 11 Jul 11 Nov 11 Mar 12 Jul 12 Nov 12 Mar 13 Jul 13 Nov 13 Mar 14 Jul 14 Nov 14 Mar 15 Jul 15 Nov 15 Mar 16 Jul 16 Nov 16 Mar 17 Singapore Note: PTCRI not significant Malaysia Mar % Mar % With global developments remaining uncertain and local economic conditions challenging, we continue to be diligent in our credit granting process and significantly strengthening our collections resources and efforts to step-up our focus on managing delinquent accounts to mitigate the impact on portfolio impairment. S$m Credit book assets - Gross Mar-16 Mar Mar-17 Allowance for impairment loss on trade receivables Singapore Malaysia Indonesia 3.1% 2.9% 2.3% Mar-16 Mar-16 Mar-17 Mar-16 Allowances for impairment loss on trade receivables (S$m) % of trade receivables at balance sheet date Notes: Month-Year: Refers to the financial position of each balance sheet item as at each period end Indonesia not significant Mar-16 Mar-17 Allowances for impairment loss on trade receivables (S$m) % of trade receivables at balance sheet date Mar-16 Mar-16 Mar-17 Allowances for impairment loss on trade receivables (S$m) % of trade receivables at balance sheet date

16 Impairment loss on trade receivables charged to Income Statement 16 Singapore Malaysia Indonesia 5.5% 15.4% 3.4% 3.4% 1.8% 3.4% 3.2% % 3.6% (As previously Impairment loss charged to Income Statement (S$m) Impairment loss on trade receivables as a percentage of average portfolio Impairment loss charged to Income Statement (S$m) Impairment loss on trade receivables as a percentage of average portfolio Impairment loss charged to Income Statement (S$m) Impairment loss on trade receivables as a percentage of average portfolio Notes: FY: Refers to the financial year from 1 April to 31 March Q4: Refers to the forth(4th) quarter from 1 January to 31 March Indonesia not significant. not significant

17 Working capital management 17 Trade payable days Inventory days Days Days Mar-16 Mar-16 Mar-17 Mar-16 Mar-16 Mar-17 Notes: Month-Year: Refers to the turnover days for each period end

18 Borrowings 18 Facility Facility amount Amount drawn down as at 31-Mar 17 Available headroom Multicurrency Medium Term Note (CAL) S$ 500 mil S$ %p.a. Expiry 15 th Mar 2019 (Previous bond of S$125 mil fully redeemed on 3 rd May 2016) S$ 425 mil Asset Securitisation Programme (CSPL) Revolving Period expiring: Jan 2019 (with possibility of 1 year extension at lenders option) Amortisation Period: 2 years after end of Revolving Period S$ 150 mil S$ 59.4 mil S$90.6 mil Syndicated Senior Loan (CMSB) Revolving Period expiring: Feb 2018 (with possibility of 1 year extension at lenders option) Amortisation Period: 3 years after end of Revolving Period RM 535 mil (has now been upsized to RM600M) RM 456 mil RM 79 mil Various Term Loans (PTCRI) Various expiry dates ranging from 2019 to 2020 IDR bil IDR263.7 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. In conjunction with the upsize of the facility to RM600M in April 2017, RM300M has now been fixed at 6.3% p.a 3. No breach in financial covenants despite adoption of new FRS 115

19 OPERATIONAL UPDATES

20 Singapore Year in Review 20 Drove CRM partnership Refurbished/relaunched COURTS Megastore & Toa Payoh Rolled out COURTS Design Studio to four stores Rolled out digital & mobile solutions to five stores Furniture range refresh Strengthened senior leadership with regional and local talent

21 Malaysia Year in Review 21 Launch of Memang Senang brand campaign with beloved local celebrities Welcomed tenant Decathlon into Sri Damansara Megastore Opened 7, closed 2 and refurbished 2 stores Continued to invest in COURTS Online Strengthened local senior leadership

22 Indonesia Year in Review 22 Welcomed tenants such as Ramayana and Super Indo into COURTS Megastore KHI Opened 3 stores, including COURTS Bogor Trade Mall Implemented pop-up store strategy; four established in the FY Started trial of door-todoor credit sales Launched COURTS Online with 1,000 SKUs

23 Opening of COURTS Tiong Bahru 23 Concluded minor renovations and reopened COURTS Tiong Bahru store on 24 June 2017, to respond to the local demand for electrical and IT products.

24 FY17/18 Focus: Deliver on Solutions Leadership 24 Expand Category Solutions-Selling Roll out category services to all markets Establish Stores As Experience Centres Launch next-gen stores, incorporating global best practices Minimum 5 new stores in MY & ID Furniture Transformation Senior talent hires Review furniture sourcing Review go-to-market strategy Credit as Differentiator Tap new customer segments Expand COURTS Flexi Home Drive Omni-Channel New platform for scalability Omni-channel mindset

25 Adoption of FRS115 Revenue from Contracts with Customers

26 What is FRS 115 Revenue from Contracts with Customers? FRS 115 is a new accounting standard that introduces a new revenue recognition model for customer contracts FRS 115 is mandatorily effective for financial year beginning on or after 1 Jan 2018; which is effective from 1 April 2018 based on COURTS financial year end All entities will be required to apply FRS 115 retrospectively FRS 115 provides clearer guidance on accounting of revenue transactions with significant financing component 26

27 Difference in Accounting Methods- FRS 18 Revenue vs FRS 115 Revenue from Contracts with Customers FRS 18 (Prior Periods) FRS 115 (Current Period - FY1617) Separate models for: Construction contracts Goods Services Focus on risk and rewards - Transfer of risks and rewards of ownership of the goods and services - No continuing managerial involvement Limited guidance on: Multiple element arrangements Variable consideration Licences Single model for performance obligations: Satisfied over time Satisfied at a point in time 5 Steps approach in to apply core principles of FRS 115 (see appendix for more details) Focus on control Revenue is only recognised when control is transferred from the perspective of a customer Control: Direct the use of the good/service (Right to deploy asset, restrict other entities from using it) + Obtain substantially remaining benefits (Potential cash inflows of the asset) More guidance: Separating elements, allocating the transaction price, variable consideration, licences, options, repurchase arrangements and so on. 27

28 Main Impact of FRS 115 to COURTS The main impact of FRS 115 to COURTS: Revenue recognition on credit sales: - revenue transactions with significant financing component to be adjusted using a discount rate that would be reflected in a separate financing transaction between the entity and its customer at contract inception (ie market rate) Revenue recognition on other services: - portion of revenue to be allocated from the service obligations provided to customers and for this revenue to be deferred and recognised over the service period. Consideration payable to customer: - eg. cashbacks, vouchers and gift cards are accounted for as a reduction of the transaction price and, therefore, of revenue 28

29 Why early adopt FRS 115? FRS 115 is mandatorily effective for financial year beginning on or after 1 Jan COURTS decision to early adopt FRS 115 is because: Credit sales is significant contributor to the Group s revenue and income, the early adoption of FRS 115 allows the Group to reflect the impact earlier, and provide the lead time to re-evaluate its future business revenue streams, if necessary In addition, the upcoming new accounting standard, FRS 109 Financial Instruments, will introduce a new model for determining the impairment of financial assets, and will impact the calculation of impairment of the Group s receivables. As such, the Group considers it prudent to adopt the two new accounting standards in stages, to ascertain the impact on the Group's financials and to avoid a substantial resource crunch involved in adopting the two new accounting standards at once. 29

30 Financial Impact of FRS 115 to FY15/16 Consolidated Income Statement Statement of Financial Position Balance Sheet Consolidated Statement of Cash Flows 30

31 Summary of Financial Impact FY 15/16 Consolidated Income Statement As previously reported For financial year ended 31 March 2016 Adoption of FRS 115 Reclassification of expenses As restated S$'000 S$'000 S$'000 S$'000 Revenue 770,367 (18,478) - 751,889 Cost of sales (517,268) ,124 (497,882) Gross profit 253,099 (18,216) 19, ,007 Other income and other gains/(losses) - net 3, ,412 Expenses - Distribution and marketing (57,305) - (4,804) (62,109) - Administrative (144,280) 684 (15,164) (158,760) - Finance (25,662) - - (25,662) Profit before income tax 29,420 (17,532) - 11,888 Income tax expense (9,142) 4,085 - (5,057) Net profit 20,278 (13,447) - 6,831 Basic earnings per share (cents) 3.82 (2.53) 1.29 Fully diluted earnings per share (cents) 3.79 (2.51) 1.28 Note: The FY15/16 comparative figures have been restated to take into account (i) the retrospective adjustments arising from the adoption of FRS 115 Revenue From Contracts With Customers (ii) there is reclassification of expense line items which has no impact on Group s profit before tax or net profit arising from these reclassification 31

32 Summary of Financial Impact FY 15/16 Statement of Financial Position Balance Sheet Balance Sheet as at 31 March 2016 As previously reported Adoption of FRS 115 As restated S$'000 S$'000 S$'000 ASSETS Current assets 474,930 (19,477) 455,453 Non-current assets 344, ,805 Total assets 819,422 (19,164) 800,258 LIABILITIES Current liabilities 276,462 25, ,880 Non-current liabilities 251,096 30, ,080 Total liabilities 527,558 56, ,960 NET ASSETS 291,864 (75,566) 216,298 Restatement of Net Assets and Retained Profits as at 31 March 2016 due to FRS 115 Total Net Financial Impact to FY15/16 Retained Profits Assets Remarks S$'000 S$'000 79,515 As previously reported as at 31 March ,864 Less: Increase in unearned service charges, net of impairment This will flow into future years as (52,434) (offset against trade receviables) earned service charge (79,369) This will flow into future years as and Less: Net deferred revenue (43,525) when the service obligations are fulfilled Increased in deferred tax assets (net) 16,590 Exchange translation 3, As restated 216,299 Note: The FY15/16 comparative figures have been restated to take into account (i) the retrospective adjustments arising from the adoption of FRS 115 Revenue From Contracts With Customers (ii) there is reclassification of expense line items which has no impact on Group s profit before tax or net profit arising from these reclassification 32

33 Summary of Financial Impact FY 15/16 For the financial year ended 31 March 2016 Consolidated Statement of Cash Flows As previously reported Adoption of FRS 115 As restated S$'000 S$'000 S$'000 Net cash generated from operating activities 29,426-29,426 Net cash used in investing activities (9,995) - (9,995) Net cash provided by financing activities 13,093-13,093 Net increase in cash and cash equivalents 32,524-32,524 Cash and cash equivalents as at beginning of financial year 112, ,383 Effects of currency translation on cash and cash equivalents (3,137) - (3,137) Cash and cash equivalents as at end of financial year 141, ,770 Note: The FY15/16 comparative figures have been restated to take into account (i) the retrospective adjustments arising from the adoption of FRS 115 Revenue From Contracts With Customers (ii) there is reclassification of expense line items which has no impact on Group s profit before tax or net profit arising from these reclassification 33

34 APPENDIX

35 Unaudited Results for the year ended 31 March Group s revenue of $740.5 million for FY16/17 was 1.5% or $11.4 million lower than FY15/16. Singapore revenue which contributed to 66.3% of the Group s revenue in FY16/17 reported a decrease of 2.7% compared to FY15/16 mainly due to lower sales of goods offset by higher earned service charge income. Malaysia revenue, which contributed to 30.3% of the Group s revenue, reported a 3.1% (in presentation currency) decrease and a 1.6% (in RM currency) increase in FY16/17 as compared to FY15/16 mainly due to lower sales of goods offset by higher earned service charge income. Indonesia revenue, which contributed to 3.4% of the Group s revenue, registered a 59.2% (in presentation currency) and 57.0% (in Rupiah currency) increase in FY16/17 compared to FY15/16 mainly due to contributions from newly opened stores. Gross profit for FY16/17 increased by 5.7% or $14.4 million resulting from higher gross profit margins compared to FY15/16. Gross profit margins increased from 33.8% in FY15/16 to 36.3% in FY16/17 mainly a result of higher earned service charge income and higher merchandise margins for the Group. Distribution and marketing expenses decreased by $5.9 million to $56.2 million in FY16/17 from $62.1 million in FY15/16. This decrease was primarily attributable to lower advertising cost. As a percentage of revenue, distribution and marketing expenses decreased to 7.6% in FY16/17 from 8.3% in FY15/16. Administrative expenses increased by $6.6 million to $165.4 million in FY16/17 from $158.8 million in FY15/16. The increase was mainly due to higher impairment allowance of trade receivables in Malaysia and Indonesia and increased rental cost for newly opened stores in Indonesia, offset by a reversal of overpayment on GST for previous years and lower branch operating expenses in Singapore. Finance expenses decreased by S$4.8 million to $20.8 million in FY16/17 from $25.7 million in FY15/16 mainly due to lower exchange loss and lower interest expenses in Singapore, offset by higher interest expenses in Indonesia and Malaysia due to increase in bank borrowings. Income tax expenses increased by $2.9 million to $7.9 million in FY16/17 from $5.0 million in FY15/16. This was mainly due to higher taxable profit from Singapore operations and was partially offset by net income tax credits from Indonesia s loss and lower taxable profit from Malaysia. The effective tax rate for FY16/17 was higher than the Singapore statutory tax rate of 17.0%, mainly due to non-tax deductible expenses.

36 Unaudited Balance Sheet as at 31 March Group 31 Mar Mar 16 S$'000 S$'000 ASSETS Current assets Cash and bank balances 98, ,509 Trade and other receivables 235, ,398 Deferred costs 8,284 8,331 Inventories 78,780 77,815 Current income tax recoverable - 2, , ,453 Non-current assets Derivative financial instruments Trade and other receivables 251, ,672 Deferred costs 11,271 10,586 Investments in subsidiaries - - Property, plant and equipment 20,906 24,792 Intangible assets 23,231 23,580 Deferred income tax assets 20,662 17, , ,805 Total assets 749, ,258 LIABILITIES Current liabilities Derivative financial instruments Trade and other payables 148, ,293 Deferred revenue 27,167 26,788 Current income tax liabilities 5,347 2,136 Borrowings ,036 Deferred income 2,569 2, , ,880 Non-current liabilities Derivative financial instruments Trade and other payables Deferred revenue 37,604 35,654 Borrowings 303, ,151 Deferred income 1,733 2,614 Deferred income tax liabilities 2,888 2, , ,080 Total liabilities 530, ,960 NET ASSETS 218, ,298 EQUITY Share capital 265, ,332 Treasury shares (19,669) (16,161) Other reserves (44,350) (33,018) Retained profits 17, Total equity 218, ,298 Cash and bank balances decreased by $48.8 million to $98.7 million as at 31 March 2017 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 drawdowns in bank borrowings. The Group s trade and other receivables (current and non-current) is relatively stable amounting to $487.0 million as at 31 March 2017 as compared to $487.1 million as at 31 March Allowance for impairment of trade receivables as at 31 March 2017 was $26.1 million, representing 5.4% of trade receivables, as compared to $21.8 million as at 31 March 2016 representing 4.5% of trade receivables. The Group s inventories increased to $78.8 million as at 31 March 2017 from $77.8 million as at 31 March 2016 due to the opening of new stores. Deferred costs relate to the incremental costs incurred by the Group to obtain or fulfil other services contracts which are capitalised as assets. The deferred costs balance would be amortised and recognised as expenses on a basis consistent with the revenue recognition of the other services to which the costs relates. Costs which are not incremental to the other services contracts are expensed as incurred. Total deferred costs increased to $19.6 million as at 31 March 2017 from $18.9 million as at 31 March 2016 due to higher sales of other services during FY16/17 as compared to FY15/16. Deferred revenue relates to unearned revenue on other services contracts for which the other services have yet to be rendered. The deferred revenue balance would be recognised as revenue as the related services are rendered. Total deferred revenue increased to $64.8 million as at 31 March 2017 from $62.4 million as at 31 March 2016 due to higher sales of other services during the FY16/17 as compared to FY15/16. Derivative financial instruments represent the carrying amount of interest rate cap 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 currency swaps. Derivative financial instruments are in a net liability position with the fair value loss in 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 $304.0 million (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 drawdowns in bank borrowings. The increase in net deferred income tax assets as at 31 March 2017 was mainly due to the recognition of tax losses from Indonesia subsidiary.

37 Unaudited Statement of Cash Flows for the year 37 ended 31 March 2017 Group YTD Mar 17 YTD Mar 16 FY16/17 FY15/16 S$'000 S$'000 Cash flows from operating activities: Net profit 23,743 6,831 Adjustments for: Income tax expense 7,936 5,057 Depreciation and amortisation 12,745 13,462 Amortisation of deferred income (2,573) (2,598) Interest expense 19,730 21,382 Interest income (3,173) (2,484) Amortisation of borrowing costs 978 1,686 Loss on disposal of property, plant and equipment and intangible assets (net) Share-based compensation Changes in fair value of derivative financial instruments Foreign currency translation differences (860) (2,005) Operating cash flow before working capital changes 60,098 42,293 Changes in working capital - Inventories (3,187) 3,545 - Trade and other receivables (22,597) (37,544) - Deferred costs (1,180) (213) - Trade and other payables 13,927 24,715 - Deferred revenue 4,546 2,984 Cash generated from operations 51,607 35,780 Income tax paid (net) (6,113) (6,354) Net cash generated from operating activities 45,494 29,426 Cash flows from investing activities Additions to property, plant and equipment (8,528) (11,265) Acquisition of intangible assets (1,356) (1,146) Proceeds from sale of property, plant and equipment Interest received 3,130 2,406 Net cash used in investing activities (6,623) (9,995) Cash flows from financing activities (Repayment of)/proceeds of bond issued (125,120) 74,468 Repayment of finance lease liabilities (595) (1,242) Proceeds from term loans 7,894 14,699 Repayment of term loan (469) (472) Proceeds from syndicated senior loan 4,327 30,423 Proceeds from /(repayment of) loan on asset securitisation 57,378 (69,138) Decrease / (increase) in fixed deposits pledged as securities for banking facilities 828 (3,903) Purchase of treasury shares (3,693) (6,110) Interest paid (19,529) (18,700) Dividend paid (6,671) (6,932) Net cash (used in) / provided by financing activities (85,650) 13,093 For the purposes of the consolidated statement of cash flows, the cash and cash equivalents comprise the following:- 31-Mar-17 S$' Mar-16 S$'000 Cash and bank balances 74,680 72,712 Fixed deposits 24,048 74,797 98, ,509 Less: Fixed deposits pledged as securities for banking facilities (4,911) (5,739) Cash and cash equivalents per consolidated statement of cash flows 93, ,770 Net (decrease) / increase in cash and cash equivalents (46,779) 32,524 Cash and cash equivalents as at beginning of financial year 141, ,383 Effects of currency translations on cash and bank balances (1,174) (3,137) Cash and cash equivalents as at end of financial year 93, ,770

38 5 Steps Approach to apply the Core Principle of FRS 115 Core Principle Recognise revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to exchange for those goods or services. 5 steps to apply the Core Principle 1. Identify the contract(s) with the customer. 2. Identify the separate performance obligations. 3. Determine the transaction price. 4. Allocate the transaction price. 5. Recognise revenue when a performance obligation is satisfied. Application of the 5-step model and beyond Contract modification (e.g. add-to contracts, refinancing) General principle is once account is modified, need to consider whether there is impairment. Contract costs Principal vs agent Sales with a right to return Bill and hold Consignment 38

39 Q & A To access the results presentation and briefing which will be available by 6 July 2017, visit: 39