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Quarterly Report For The Financial Period Ended 30 June 2018

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Unaudited Interim Financial Report For The Quarter Ended 30 June 2018
Condensed Consolidated Statement Of Comprehensive Income

Condensed Consolidated Statement Of Comprehensive Income

Unaudited Interim Financial Report For The Quarter Ended 30 June 2018
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

Continuing Operations

For the current quarter under review, the Group reported a decrease of 13.2% in revenue to RM110.66 million as compared to RM127.44 million recorded in the previous year's corresponding quarter. The decrease in revenue was mainly due to dropped in export sales of 13% as compared to last year same quarter.

The Profit before tax ("PBT") decreased by 51.5% mainly due to the decrease in revenue and a goodwill written off of a subsidiary company, amounting to RM2.01 million as well as a provision loss of RM4.34 million as a result of the proposed demerger of CRG.

Retailing Segment

Malaysia(Local Market)

Revenue contributed by local market decreased by RM8.02 million or 10.3% as compared to the corresponding quarter due to weak retail sentiment in Malaysia and closing of certain non-performing outlets.

As a result of reduction in operating expenses, the operating profit for the current quarter increased by 2.80% to RM10.61 million as compared to corresponding quarter of RM10.32 million.

Overseas Market

Revenue declined by RM7.94 million or 16.4% as compared to the corresponding quarter mainly due to the significant drop in export sales especially in Singapore which declined by RM5.45 million or 16.5%.

The operating profit declined by RM1.32 million to RM0.98 million as compared to RM2.30 million in previous year's corresponding quarter mainly attributable to weak retail sentiment in Singapore and Vietnam.

Manufacturing

Revenue decreased by approximately 95.9% as compared to the previous year's corresponding quarter.

The segment recorded an operating loss of RM0.06 million as compared to the corresponding quarter of profit at RM0.15 million due to decrease in other income and increase in administrative expenses.

Investment and property development

Revenue that derived mainly from rented investment properties decreased by RM0.27 million as compared to the corresponding quarter due to lower tenancy rate.

The operating loss for the current quarter increased to RM4.90 million as compared to the corresponding quarter of RM0.24 million, an increase of operating loss of RM4.66 million mainly due to goodwill written off of a subsidiary company amounting to RM2.01 million as well as a loss of RM4.34 million as a result of the proposed demerger of CRG. The loss was partially off-set by a fair value gain on Investment Properties amounting to RM1.30 million.

Discontinued Operations

Revenue increased by RM11.71 million or 45.1% as compared to the corresponding quarter due to opening of new boutiques and sales were performed well.

The operating profit for the current quarter has increased by RM3.87 million to RM5.11 million as compared to corresponding quarter of RM1.24 million due to an increase in fair value of an investment property amounting to RM3.00 million and also increase significantly in revenue and also decreased in administrative costs.

Table 1: Financial review for current financial period vs corresponding last financial period

Condensed Consolidated Statement Of Financial Position

Continuing Operations

For the year ended 30 June 2018, the Group's revenue decreased by RM77.75 million or 15.0% as compared to the corresponding cumulative quarters in the preceding year. The Profit before tax dropped by 42.6% to RM29.94 million as compared to RM52.19 million recorded in 4Q YTD FY2017.

The higher rate of decrease in PBT as compared to the decrease in revenue was also attributable to a goodwill written off of a subsidiary company amounting to RM2.01 million, provision for and PPE written off of RM1.90 million (2017: RM1.33 million) and a net foreign exchange translation loss of RM3.18 million (2017: Gain of RM1.00 million).

Retailing Segment

Malaysia(Local Market)

Revenue decreased by RM36.77 million or 12.1% as compared to the 4Q YTD FY2017 due to soft retail sentiment as well as closing of certain non-performing outlets.

The operating profit for 4Q 2018 YTD decreased by 9.2% to RM29.71 million as compared to 4Q YTD FY2017 of RM32.73 million in line with the significant decline in revenue.

Overseas Market

Revenue declined by RM38.75 million or 18.4% as compared to the 4Q YTD FY2017 due to tough retail sentiment in Singapore, Indonesia and Vietnam.

The operating profit for 4Q YTD FY2018 decreased by RM16.73 million or 63.0% as compared to the corresponding cumulative quarters mainly due to the decrease of operating profit in Singapore and other ASEAN countries amounting to RM15.92 million and RM0.81 million respectively. Lower operating profit mainly due to lower revenue achieved and high operating cost in overseas market.

Manufacturing

Revenue decreased by approximately 83.3% as compared to the 4Q YTD FY2017 due to lower orders as a result of soft retail market.

The segment recorded an operating loss at RM0.11million for the 4Q YTD 2018 as compared to operating loss of RM0.27 million in 4Q YTD FY2017 due to slightly increase in gross profit.

Investment and property development

Revenue that derived from rented investment properties increased by RM0.36 million as compared to the 4Q YTD FY2017.

However, this segment recorded a loss of RM6.32 million as compared to the corresponding cumulative quarters of RM2.38 million due to goodwill written off of a subsidiary company amounting to RM2.01 million as well as a loss of RM4.34 million as a result of the proposed demerger of CRG. The loss was partially off-set by a fair value gain on Investment properties amounting to RM1.30 million.

Discontinued Operations

Revenue increased by RM19.95 million or 21.0% as compared to the 4Q YTD FY2017 due to more aggressive promotional activities carried out during the financial year under review.

The operating profit for 4Q YTD FY2018 increased by RM4.56 million to RM10.04 million. The increase was due to a gain on fair value adjustment on Investment properties amounting to RM3.00 million and also a significant increase in revenue coupled with a decrease in operating cost.

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

Condensed Consolidated Statement Of Financial Position

Continuing Operations

The Group's revenue for the current quarter increased 6.2% to RM110.66 million as compared to RM104.20 million recorded in the preceding quarter. The increased of revenue reported in the current quarter was mainly due to increase in sales in Malaysia as well as in other countries amounting to RM4.72 million and RM2.74 million as compare with preceding quarter respectively.

For the current quarter under review, the Group's PBT increased to RM5.56 million as compared to RM2.98 million in the preceding quarter ended 31 March 2018. There was a professional fees of "Carlo Rino" (CR) listing expenses amounting to RM0.25 million as well as an forex loss of RM0.32 million incurred in 3Q FY2018 which have also resulted the lower PBT in the preceding quarter.

Discontinued Operations

The revenue for the current quarter increased by 59.5% to RM37.65 million mainly due to aggressive promotional activities carried out during festive season in 4Q FY2018.

The increased of profit before tax of RM3.51 million was mainly due to a gain on fair value adjustment on Investment properties amounting RM3.00 million as well as the significant increase in revenue.

Prospect

Though the abolishment of GST will stimulate consumer sentiment, the reintroduction of SST will bring cost pressure to retailers as a whole. Therefore, the retail sector is expected to remain challenging as a result of rising costs, increased competitive price pressure as well as relatively weak consumer demand globally.

In addition, the development of new technology and new media touchpoints have directly or indirectly affected the retail infrastructure. As such, retailers are striving to increase efficiency, reinvent in-store models, offer new customer experience and investing into digital platform as well as engaging new media touchpoints in order to stay relevant in the market place.

Giving the uncertain economic outlook, the Group's prospects for the coming financial year are expected to be challenging. The Group will continue to be vigilant in cost management and engage in new media strategy to interact proactively with customer. With increasing competition, the Group will be prudent in managing its costs and uphold the design and quality of its products as well as creating new customer experience to enable the Group to maintain its branding position as one of the preferred and major retail players in the region.

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