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Quarterly Report For The Financial Period Ended 30 September 2017

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Unaudited Interim Financial Report For The Quarter Ended 30 September 2017
Condensed Consolidated Statement Of Comprehensive Income

Condensed Consolidated Statement Of Comprehensive Income

Unaudited Interim Financial Report For The Quarter Ended 30 September 2017
Condensed Consolidated Statement Of Financial Position

Condensed Consolidated Statement Of Financial Position

Performance Review

Table 1: Financial review for current quarter

Condensed Consolidated Statement Of Financial Position

The Group reported a decrease of 13.3% in revenue to RM118.88 million for the current quarter ended 30 September 2017 in comparison to RM137.18 million recorded in the previous year's corresponding quarter mainly due to Hari Raya festive sales had been shifted earlier and recorded in the preceeding quarter. As a result the profit before taxation ("PBT") declined by 80.7% to RM2.65 million mainly due to lower revenue achieved and a slight increase in overall selling and distribution expenses. In addition, the previous year's corresponding quarter included a gain on disposal of property amounted to RM3.0 million as well as unrealised gains in forex of RM1.1 million.

Retailing Segment

Malaysia
Revenue declined by RM14.48 million or 16.4% as compared to the corresponding quarter due to the weak consumer sentiment and in the absence of Hari Raya festive season sales. The Group has closed down a number of non-performing boutiques and consignments counters particularly for licensed brands, and as well as cessation of certain under-performing licensed brands under the Group's portfolio which has resulted in reduction in revenue. The operating profit for the current quarter has decreased to RM2.39 million as compared to corresponding quarter of RM6.24 million.

Singapore
Revenue declined by RM2.28 million or 6.9% as compared to the corresponding quarter due to the decrease in royalty income. The operating profit for the current quarter has decreased to RM0.99 million as compared to the corresponding quarter of RM7.96 million, a decrease of nearly 87.6% mainly due to higher advertising and promotion spending on Braun Buffel 130 years celebrations incurred during the current quarter.

Indonesia
Revenue declined by RM1.25 million or 13.9% as compared to the corresponding quarter due to the absence of Hari Raya festive spending following the shift in festive calendar. The segment recorded a loss of RM0.14 million as compared to an operating profit of RM0.02 million in previous year's corresponding quarter, mainly attributed to higher advertising and promotion expenses on the Carlo Rino brand.

Vietnam
Revenue declined by RM0.08 million or 5.1% as compared to the corresponding quarter due to weak consumer sentiment. The segment recorded an operating loss of RM0.04 million as compared to an operating profit of RM0.19 million in previous year's corresponding quarter, mainly due to opening of a Bonia boutique with higher advertising and selling expenses incurred.

Other Countries
Revenue mainly derived from the oversea sales to ASEAN and Middle East countries. Revenue has increased marginally of RM0.06 million or 1.3% as compared to the corresponding quarter due to increase in export sales to ASEAN countries.

Manufacturing

Revenue decreased by approximately 56.2% as compared to the previous year's corresponding quarter arising from a decline in the domestic market. The operating profit for the current quarter has decreased to RM0.21 million as compared to the corresponding quarter of RM0.26 million.

Investment and property development

Revenue increased by RM0.29 million or 130.1% as compared to the corresponding quarter. The revenue was derived mainly from rental of investment properties owned by the Group. However, Tte operating profit for the current quarter has decreased to RM0.25 million as compared to the corresponding quarter of RM0.30 million, a decrease of 16.8% mainly due to increase in general and administration expenses.

Table 2: Financial review for current quarter compared with immediate preceding quarter

Condensed Consolidated Statement Of Financial Position

The Group's revenue for the current quarter was RM118.88 million representing a significant decreased of RM34.5 million or 22.5% as compared to RM153.39 million recorded in the preceding quarter. The higher revenue reported in its previous quarter was mainly attributed to the higher sales volume during the Hari Raya festive season which fell in the preceding quarter.

The lower profit before tax was within expectation as the revenue in the previous quarter was substantially boosted by the Hari Raya festive season, in particular Malaysia and Indonesia. The revenue is lower by 22.5% but the operating expenses only reduced by 12.1%. Hence, the Group only achieved a PBT of RM2.65 million.

Prospect

The retail sector is expected to remain challenging as a result of rising costs of doing business, increased competitive price pressure as well as weak consumer demand.

In addition, the influx of online marketing has directly or indirectly affected the retail infrastructure. As such, retailers are striving to increase efficiency, reinvent in-store models, offer additional services and investing into digital platform in order to stay relevant in the market place.

Giving the uncertain economic outlook, the Group's prospects for the remaining financial year are expected to be challenging. the Group will continue to be vigilant in cost management and cautiously adjust its selling price to cope with rising cost of operation. With increasing competition, the Group will be prudent in managing its costs and uphold the design and quality of its products to enable the Group to maintain its branding position as one of the preferred and major retail players in the region.

The Group will continue its business consolidation by closing down of non-performing outlets, improve gross margins by improving the sourcing of products and continue to reorganizing its retail operations and to strengthen brand positioning to increase efficiency and productivity.

Moving forward, the Group will focus and channel the resources to grow Bonia, Braun Buffel, Carlo Rino and Sembonia, consolidate and improve the performance of its licensed brands, continue to develop and strengthen its overseas markets, in particular Indonesia, Vietnam and some Middle East countries.