DJ HK Bourse: Results Announcement From International Housewares Retail Co. Ltd.

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https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0729/2020072900770.pdf ANNUAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 30 APRIL 2020
The board of directors (the "Board" or "Directors") of International Housewares Retail
Company Limited (the "Company" or "we" ) is pleased to announce the consolidated annual
results of the Company and its subsidiaries (collectively referred to as the "Group") for the year
ended 30 April 2020 (the "Year") prepared in accordance with the relevant requirements of the
Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the
"Listing Rules" and the "Stock Exchange" respectively), together with comparative figures for
the financial year ended 30 April 2019 ("2018/19").
HIGHLIGHTS The Group's revenue increased by 8.2% to HK$2,542,384,000 (2018/19: HK$2,350,351,000). Profit attributable to owners of the Company increased by 26.8% to HK$150,927,000 (2018/19: HK$119,052,000)(1). The Group's gross profit rose by 9.6% to HK$1,184,161,000 (2018/19: HK$1,080,654,000), while gross profit margin was 46.6% (2018/19: 46.0%). The Board has resolved to recommend payment of a final dividend of HK11 cents per share. Together with the interim dividend of HK5.5 cents per share already paid, the total dividend for the Year would be HK16.5 cents per share (2018/19: HK14.3 cents per share).
Note:
1. Comparative figures for the financial year ended 30 April 2019 are shown as 2018/19 in brackets. 1
CORPORATE PROFILE
Established in 1991, the Group is the largest houseware retail chain in Hong Kong, Singapore
and Macau (1). It offers houseware, trendy items, personal care, snack and household FMCG
through an extensive retail network comprising 378 stores in Hong Kong, Singapore, Macau,
East Malaysia, Cambodia, Australia and Vietnam under renowned brands including JHC (
), Japan Home (), 123 by ELLA, $MART (), City Life () as well
as online platforms JHC eshop () and EasyBuy (). Leveraging its extensive
sourcing channels and series of private label products, the Group provides a full range of items
at competitive prices, creating a "one-stop" shopping experience for customers, and paving the
road to transform itself to become a chain of general merchandise stores (GMS).
FINANCIAL PERFORMANCE
The Group continued to expand product offerings and introduce new product categories from
snacks as well as FMCG such as personal and home care items during the Year to capture
additional market opportunities and enlarge its customer base. In addition, driven by the growth
in overall comparable store sales, opening of new stores and the increase of foot traffic brought
about by new product categories mentioned above, the Group's revenue rose by 8.2% to a
historical high at HK$2,542,384,000 (2018/19: HK$2,350,351,000).
The Group's gross profit rose by 9.6% to HK$1,184,161,000 (2018/19: HK$1,080,654,000),
while gross profit margin was 46.6% (2018/19: 46.0%). Profit attributable to owners of the
Company increased by 26.8% to HK$150,927,000 (2018/19: HK$119,052,000), mainly due to
the Group's continued efforts in expanding its product portfolio, while constantly monitoring
purchase prices and the logistics costs of its sourcing activities, as well as prudently managing
operating expenses. Furthermore, the Singapore business has turned around to a profit making
position and the positive financial contribution in the market added momentum for sound
growth.
LIQUIDITY AND FINANCIAL RESOURCES
As at 30 April 2020, the Group maintained a strong financial position with cash and cash
equivalents of HK$362,737,000 (30 April 2019: HK$369,703,000). Most of the Group's cash
and bank deposits were denominated in Hong Kong dollars, and were deposited with major
banks in Hong Kong with maturity dates falling within three months.
The significant increase of finance expenses is totally due to the adoption of a new accounting
standard HKFRS 16 "Leases" for the Year. After removing the impact so arising, the Group's
finance expenses were HK$736,000 (2018/19: HK$793,000).
The Group implements a stable treasury management policy and does not engage in any highly
leveraged or speculative derivative products. It places most of its surplus cash in Hong Kong
dollar bank deposits with appropriate maturity period for meeting future funding requirements.
The current ratio of the Group was 1.4 (2) (30 April 2019: 2.7). Total borrowings amounted to
HK$22,617,000 as at 30 April 2020 (30 April 2019: HK$39,816,000). The Group was in a net
cash position as at 30 April 2020 and its gearing ratio as determined by total borrowings and
loans from non-controlling shareholders divided by total equity was 3.3% (30 April 2019:
5.6%). 2
LIQUIDITY AND FINANCIAL RESOURCES (continued)
Notes: In terms of revenue and number of stores the Group operated in the calendar year 2012 according to the
1. Frost & Sullivan Report. There were significant increases in right-of-use assets as well as non-current and current portions of lease
2. liabilities under consolidated balance sheet as at 30 April 2020 reported under HKFRS 16 Leases (new standard). Related comparative figures for the financial year ended 30 April 2019 has not been restated, and they were prepared under HKAS 17 "Leases". Hence, comparison between the figures prepared under different bases of reporting would not be meaningful.
OPERATING EFFICIENCIES
Although the operating environment was challenging, the Group achieved satisfactory
comparable store sales growth(1) in Hong Kong of 4.6% (2018/19: 4.8%) during the Year.
The Group launched the in-store online shopping iPanel "Easy Buy". This not only enables the
sharing of inventory for on- and off-line channels, but also gives greater flexibility in choosing
retail spaces and controlling overall rental expenses. In addition, with strong brand recognition
and product popularity among customers, the Group has more flexibility in choosing new store
sites, and hence it has been able to control rental expenses on its operation to meet the
requirement for future business growth.
In addition, to mitigate the effects of the increase of employee expenses during the Year, the
Group offers training programmes to employees to maximise their productivity and they are
redeployed to different stores from time to time for monitoring store man-hour expenses. As a
result, the Group was able to maintain employee expenses at a stable level as a percentage of
revenue for the Year.
Despite such difficulties, with a brand well-recognised and products well-appreciated by
customers, the Group has achieved record high revenue for the Year. Moreover, through the
above-mentioned efforts and prudence exercised in managing expenses, the Group was able to
reduce operating expenses as a percentage of revenue during the Year to 39.5% (2018/19:
40.8%).
The following table provides details of the Group's operating expenses:
For the Year Ended 30 April 2020 2019 (%) of (%) of Change HK$ revenue HK$ revenue (%)
Distribution and advertising expenses 64,091,000 2.5% 59,176,000 2.5% 8.3%
Administrative and other operating expenses 941,809,000 37.0% 900,620,000 38.3% 4.6%
Total operating expenses 1,005,900,000 39.5% 959,796,000 40.8% 4.8%
Note:
1. Comparable store sales growth represents a comparison between the store sales of those stores that were open throughout the years being compared. 3
DISTRIBUTION NETWORK
Established in 1991, the Group is the largest houseware retail chain in Hong Kong, Singapore
and Macau(1). It offers houseware, trendy items, personal care, snack and household FMCG
through an extensive retail network comprising 378 stores in Hong Kong, Singapore, Macau,
East Malaysia, Cambodia, Australia and Vietnam under renowned brands including JHC (
), Japan Home (), 123 by ELLA, $MART (), City Life () as well
as online platforms JHC eshop () and EasyBuy (). Leveraging its extensive
sourcing channels and series of private label products, the Group provides a full range of items
at competitive prices, creating a "one-stop" shopping experience for customers, and paving the
road to transform into a chain of general merchandise stores (GMS).
The cumulative brand awareness that the Group has enjoyed over the years, its steadily-growing
extensive retail network and large global supplier network have contributed and will continue to
contribute to steady business development. For store network development, taking into account
an overall rental adjustment becoming more widespread and the HKSAR Government stepping
up efforts to increase housing supply, the Group will continue to look for suitable locations for
opening new stores, particularly in newly-developed residential districts and housing estates.
We believe these moves shall enable us to further increase our share of the Hong Kong retail
market and maintain its position as one of the largest houseware retail chains in the region.

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July 29, 2020 06:05 ET (10:05 GMT)