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2015/16 Final results
Corporate Presentation
25 July 2016
Stock code: 1373
International Housewares Retail Company Limited 2015/16 Final Results
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liability on the basis of this presentation or these materials or any information in, or omitted from, or any inaccuracy or error in respect of, this presentation or these materials or otherwise.
2
Stock code: 1373
International Housewares Retail Company Limited 2015/16 Final Results
Agenda
3
Business Highlights
Business Review by Market
Financial Performance
Outlook and Strategies
4 International Housewares Retail Company Limited 2015/16 Final Results
Business Highlights
Stock code: 1373
International Housewares Retail Company Limited 2015/16 Final Results
HK business contributed
HK$97.4 million to net profit
*before on-off item (i)
Results Highlights – FY2016
5
Revenue grew 4.5% to
HK$2,039.6 million
Strong financial position with
cash of HK$406.1 million
Profit attributable to equity holders is HK$80.4 million
*before on-off items(i&ii)
Proposed interim Dividend 5.6 HK cents per share
Gross Profit increased by 5.0%
to HK$947.6 million
HK net profit margin for 2H
FY16 improved to 6.4% from 6.2%
2H FY15
* One-off items: (i) exiting cost from Malaysia and Mainland China market of HK$10.2m ;and (ii) exchange loss on RMB deposit of HK$3.7m.
Stock code: 1373
International Housewares Retail Company Limited 2015/16 Final Results
Retail Network
358 stores
6
FY2013 FY2014 FY2015 FY2016 Net change
Hong Kong 230 241 267 277 10
Singapore 32 52 65 62 (3)
West Malaysia 9 15 12 0 (12)
PRC 7 9 8 0 (8)
Macau 5 6 8 8 0
Total 283 323 360 347 (13)
Number of directly-owned stores
Hong Kong: 277 stores
Macau: 8 stores
Singapore: 62 stores
347 Directly-owned Stores
East Malaysia: 1 stores
Saudi Arabia: 5 stores
New Zealand: 1 stores
Indonesia: 1 stores
Cambodia: 3 stores
11 Licence Stores
+10 stores in Hong Kong in FY16
7 International Housewares Retail Company Limited 2015/16 Final Results
Financial Performance
Stock code: 1373
International Housewares Retail Company Limited 2015/16 Final Results
For the 6 months to Apr 2016 Apr 2015 Change
Turnover (HK$’000) 940,004 899,387 +4.5%
Gross Profit (HK$’000) 437,456 407,866 +7.3%
*Net profit from Hong Kong Business (HK$’000) 60,751 55,398 +9.7%
Key ratios
Gross profit margin 46.5% 45.3% +1.2pp
*Net profit margin 6.5% 6.2% +0.3pp
Financial Performance – Hong Kong 2H FY2016
8
* Excluding one-off item of HK$0.7m exchange loss on RMB deposit
Stock code: 1373
International Housewares Retail Company Limited 2015/16 Final Results
For the 12 months to Apr 2016 Apr 2015 Change
Turnover (HK$’000) 2,039,575 1,951,278 +4.5%
Gross Profit (HK$’000) 947,577 902,790 +5.0%
*Net profit from Hong Kong Business (HK$’000) 97,416 106,016 -8.1%
*Profit attributable to equity holders (HK$’000) 80,378 88,390 -9.1%
Key ratios
Gross profit margin 46.5% 46.3% +0.2pp
*Net profit margin 3.9% 4.5% -0.6pp
Total Dividend
Interim dividend (HK cents) 5.0 4.9 +0.1
Final dividend (HK cents) 5.6 5.6 -
Total Dividend 10.6 10.5 -0.1
Payout Ratio 114 86% +28pp
Financial Performance – Group FY2016
9
* Excluding one-off items HK$3.7m exchange loss on RMB deposit and HK$10.2m cost for exiting Malaysia and China market
Stock code: 1373
International Housewares Retail Company Limited 2015/16 Final Results
As at April 2016 2015 Change
CAPEX: Plant & equipment (HK$’000) 26,922 37,609 -28.4%
CAPEX: Property (HK$’000) 12,463 42,618 -70.8%
Net Cash generated from Operating
Activities (HK$’000) 105,554 112,494 -6.2%
Cash and cash equivalents (HK$’000) 406,080 447,376 -9.2%
Inventory Turnover (1) 94 103 -9 days
Trade Payable Turnover (2) 54 53 +1 day
10
Notes:
1. Inventory turnover = Closing inventory / Cost of sales x365
2. Trade payables turnover = Closing trade payables / Cost of sales x365
Financial Performance – Group FY2016
11 International Housewares Retail Company Limited 2015/16 Final Results
Business Review by Market
Stock code: 1373
International Housewares Retail Company Limited 2015/16 Final Results
Revenue Breakdown
Revenue breakdown
12
Macau
Singapore
Hong Kong
Revenue growth by region
Compared in Local Currency
1,489,652 1,651,154
1,755,006
200,128
238,213 231,115
FY2014 FY2015 FY2016
Hong Kong Singapore West Malaysia PRC Macau
1,951,279
33,635 4,306
19,117
36,560 4,945
20,407
39,341 4,822 9,290 11,746,838
2,039,575
Stock code: 1373
International Housewares Retail Company Limited 2015/16 Final Results
As at Dec / for the year ended Dec 2016 2015 Change
Number of stores 277 267 +10 stores
Gross profit margin 46.4% 45.7% +0.7pp
Comparable store sales growth (CSSG) 5.3% 8.2% -2.9pp
Hong Kong – Strategic Focus with steadfast growth
Revenue growth driven by increase of retail stores and comparable store sales
Number of members growing over 390,000, contributing 14% of total retails sales in Hong Kong
Introducing New store format “123 by ELLA”, offering accessories in a range of fixed prices
Number of Ella stores up from 7 (acquired in Dec 14) to 13 as at 30-Apr-16 with 2 of which 2 is “123 by
ELLA”
Boosting sales by shop profiling and product mix optimization
Improving gross margin : (1) long-established relationship and stably purchase enabling us to constantly ask
for better price /support from suppliers; (2) enlarging sourcing capacity for higher margin products ; (3)
benefiting from the strong HK$/US$; and (4) leveraging on extensive supplier network
Broadening product categories on JHCeshop to attract more online shoppers
Reviewing internal procedures and cost structure regularly so as to improve operation efficiency
13
Record high revenue, an increase of 6.3%
Stock code: 1373
International Housewares Retail Company Limited 2015/16 Final Results
Singapore – 2nd market with strong focus
Consumer sentiment remaining weak
Continuing to improve CSSG and operational efficiency
More conservative approach to store opening
Holding optimistic view on further development
14
As at Apr / for the year ended Apr
2016 2015 Change
Number of stores 62 65 -3 stores
Comparable store sales growth (CSSG)* -1.9% -8.9% +7.0pp
Revenue grew by 3.7%* with significant improvement on CSSG
* Compared in local currency
Stock code: 1373
International Housewares Retail Company Limited 2015/16 Final Results
Other Markets
15
* Compared in local currency
Macau Good profit margin with steady growth
West Malaysia Exited
China Exited
16 International Housewares Retail Company Limited 2015/16 Final Results
Business Updates
Stock code: 1373
International Housewares Retail Company Limited 2015/16 Final Results
Focusing in Hong Kong & Singapore 1
17
Continue expansion in Hong Kong home market
Revamp eShop, be more appealing to online shoppers
Look Singapore as the 2nd important market, maintain strong focus, hold optimistic
view in mid-to-long term
Stock code: 1373
International Housewares Retail Company Limited 2015/16 Final Results
New Store Format : 123 by Ella 2
18
Offering products in a range of fixed prices
Simple store with fast-moving and trendy products of lifestyle, health
and beauty in treasure hunting shopping environment
1st store in Wong Tin Sin by converting an existing “Ella” into a “123
by Ella” store in Nov-15 with 46% CSSG for the 5 months to Apr-16
2nd store in Tin Shui Wai, newly set up in Apr-16 with encouraging
sales
Target at over 25 stores in Hong Kong by the end of FY2017
Stock code: 1373
International Housewares Retail Company Limited 2015/16 Final Results
Overseas Franchise 3
19
New Franchise: Australia
New Franchise: Vietnam
Existing Franchise
Malaysia
Saudi Arabia
New Zealand
Indonesia
Cambodia
1
2
3
4
5
6
7
Signed up in Oct-15
2 stores will be in Sydney in July
2016
Signed up in May-16
It is expected that 3 stores to be
opened in first year
Stock code: 1373
International Housewares Retail Company Limited 2015/16 Final Results
Reinforce the leading position and sustainable growth in Hong Kong
4.1
20
CSSG by Strategic Renovation Plan
Concept stores to appeal to younger segment
Providing customers with better shopping environment
Attracting traffic by modernized look and customer-oriented display
A clear message of “we are staying to provide better services and
products”
Setting up concept stores at strategic locations
Contemporary fixtures, flooring and lighting, creating pleasant and
comfortable store atmosphere
Tailored product-mix in 8 Zones, inspiring new ideas in living
Offering good-value, trendy and stylish products to target
customers
1 2 3 4 5 6 7 8
Stock code: 1373
International Housewares Retail Company Limited 2015/16 Final Results
Reinforce the leading position and sustainable growth in Hong Kong
21
Unique Private Label Products with higher margins
4.2
Working across assortment, series, new items, product mix and product range each for
private label based consumer trends
Adding value and enhancing uniqueness by package design
Good-value products to customers in return for higher margins
Personal & health Bedding and linens Umbrellas
Gardening Stationery
Stationery Porcelain kitchenware Ceramic ware
Charcoal products
Stock code: 1373
International Housewares Retail Company Limited 2015/16 Final Results
Reinforce the leading position and sustainable growth in Hong Kong
22
JHCeShop Mobile Apps
4.3
Extending from web-based desktop to
mobile
Broadening product categories to attract
more business
Strengthening logistic capacity
Free pick-up service at extensive retail
locations
Effective way to spread promotion
information
Full range front-end features for the
customer loyalty program
Quick information of store locations
Linkage to JHCeShop
Stock code: 1373
International Housewares Retail Company Limited 2015/16 Final Results
Reinforce the leading position and sustainable growth in Hong Kong
23
Operational Efficiency
4.4
Regularly reviewing and monitoring internal procedures/cost structure to enhance
competitiveness
Improving operation efficiency by simplifying workflow and coordinating with business-
partners even closer
Stock code: 1373
International Housewares Retail Company Limited 2015/16 Final Results
Network Expansion Plan and CAPEX
Planned store expansion & estimated capital expenditures
24
Store expansion
(number of stores) Actual at 30 Apr 16 Net increase
FY2017
Net increase
FY2018
Hong Kong (incl. Ella) 277 20 20
Macau 8 1 2
Singapore 62 3 5
Total 347 24 27
Estimated capital expenditures
HKD’000 FY2017 FY2018
New store openings 20,000 21,000
Ongoing renovations of existing stores 22,000 22,000
The above estimated capital expenditures not including the
acquisition & improvements to logistics of HK$50m
25 International Housewares Retail Company Limited 2015/16 Final Results
Q & A
26 International Housewares Retail Company Limited 2015/16 Final Results
Thank You!