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Quarterly Report For The Financial Period Ended 31 December 2017

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Unaudited Interim Financial Report For The Quarter Ended 31 December 2017
Condensed Consolidated Statement Of Comprehensive Income

Condensed Consolidated Statement Of Comprehensive Income

Unaudited Interim Financial Report For The Quarter Ended 31 December 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

For the current quarter under review, the Group reported a decrease of 6.7% in revenue to RM160.34 million as compared to RM171.88 million recorded in the previous year's corresponding quarter. The decrease in revenue was anticipated due to closure of certain counters as part of the Group's rationalisation process.

Despite the revenue has decreased by RM11.54 million, with the slight improvement in gross profit margin coupled with the decrease in operating costs of RM7.09 million, the Group posted an improved profit before tax of RM21.30 million which is 5.2% higher than the PBT of RM20.25 million reported in the previous corresponding quarter

Retailing Segment

Malaysia
Revenue increased by RM2.06 million or 1.9% as compared to the corresponding quarter due to Christmas festive season and year-end sales. The operating profit for the current quarter has increased to RM15.35 million as compared to corresponding quarter of RM13.90 million as a result of increase in revenue coupled with the decreased in administration costs

Singapore
Revenue declined by RM4.63 million or 10.8% as compared to the corresponding quarter mainly due to the slower sales and decrease in royalty income. The operating profit for the current quarter has decreased slightly to RM7.87 million as compared to the corresponding quarter of RM8.36 million, a decrease of nearly 5.9% caused by lower sales achievement during the current quarter.

Indonesia
Revenue declined by RM5.43 million or 42.7% as compared to the corresponding quarter due to the weak consumer sentiment as well as closure of certain counters as part of the rationalisation process. The segment recorded a loss of RM0.18 million as compared to an operating profit of RM0.84 million in previous year's corresponding quarter, mainly attributed to lower sales achievement as well as higher advertising and promotion expenses of RM0.31 million spent to promote Carlo Rino brand.

Vietnam
Revenue declined by RM1.01 million or 35.5% as compared to the corresponding quarter due to weak consumer sentiment. The segment recorded an operating profit of RM0.09 million as compared to an operating profit of RM0.71 million in previous year's corresponding quarter. This was mainly attributable to lower revenue while the operating expenses remained high in the current quarter.

Other Countries
Revenue mainly derived from the overseas sales to ASEAN and Middle East countries which has dropped by RM1.59 million or 40.6% as compared to the corresponding quarter due to a significant reduce in orders by our customers.

Manufacturing

Revenue decreased by approximately 98.6% as compared to the previous year's corresponding quarter resulted from soft retail market. The operating loss for the current quarter has decreased to RM0.21 million as compared to the corresponding quarter of RM0.39 million due to increase in other income coupled with lower administration expenses.

Investment and property development

Revenue that derived mainly from rented investment properties has decreased by RM0.02 million or 9.1% as compared to the corresponding quarter. However, the operating loss for the current quarter has reduced to RM0.50 million as compared to the corresponding quarter of RM1.54 million, a decrease of 67.4% being a result of a reduction in administration expenses, particularly the staff cost

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

Condensed Consolidated Statement Of Financial Position

For the 6 months ended 31 December 2017, the Group's revenue decreased by RM29.83 million or 9.7% as compared to the corresponding cumulative quarters in the preceding year. The Profit before tax has dropped to RM23.95 million as compared to RM34.01 million recorded in 2Q 2017 YTD.

Retailing Segment

Malaysia

Revenue decreased by RM12.43 million or 6.3% as compared to the 2Q 2017 YTD due to closing down of a number of non-performing boutiques and consignments counters. Certain underperforming licensed brands under the Group's portfolio also exit from the local retail market which has resulted in a reduction in revenue. The operating profit for 2Q 2018 YTD has decreased to RM17.74 million as compared to 2Q 2017 YTD of RM20.14 million, which was mainly due to a decrease in revenue as well as an increase in advertising and promotion expenses of RM1.15 million spent on Braun Buffel 130 years celebrations which incurred in 2Q 2018 YTD.

Singapore
Revenue declined by RM6.91 million or 9.1% as compared to the 2Q 2017 YTD mainly due to the slower sales and decrease in royalty income. The operating profit for 2Q 2018 YTD has decreased to RM8.86 million as compared to the corresponding cumulative quarters of RM16.32 million, a decrease of nearly 45.7% mainly caused by the slower sales and higher advertising and promotion expenses of RM5.07 million spent on Braun Buffel 130 years celebrations incurred during 2Q 2018 YTD.

Indonesia
Revenue declined by RM6.68 million or 30.8% as compared to the 2Q 2017 YTD. The segment recorded a loss of RM0.32 million as compared to an operating profit of RM0.86 million in previous year's corresponding cumultative quarters, mainly attributed to a decrease in revenue as a result of closure of some Bonia counters being part of the Group's rationalisation process. The lower profit also due to higher advertising and promotion expenses of RM0.63 million spent to promote Carlo Rino brand.

Vietnam
Revenue declined by RM1.09 million or 25.0% as compared to the 2Q 2017 YTD due to weak consumer sentiment. The segment recorded an operating profit of RM0.06 million as compared to an operating profit of RM0.90 million in 2Q YTD 2017, mainly due to opening of a Bonia boutique with higher advertising and operating expenses incurred.

Other Countries
Revenue mainly derived from the overseas sales to ASEAN and Middle East countries which has dropped by RM1.54 million or 18.6% as compared to the 2Q 2017 YTD due to a significant reduce in orders by our customers

Manufacturing

Revenue decreased by approximately 76.6% as compared to the 2Q 2017 YTD as a result of soft retail market. The operating profit for the 2Q YTD 2018 has increased to RM0.004 million as compared to 2Q 2017 YTD operating loss of RM0.13 million due to increased in other income of RM0.10 million coupled with lower in administration expenses of RM1.94 million as compared to corresponding cumulative quarters of RM2.04 million.

Investment and property development

Revenue that derived from rented investment properties has increased by RM0.26 million or 58.8% as compared to the 2Q 2017 YTD. However, the segment recorded a loss of RM0.26 million as compared to the corresponding cumulative quarters of RM1.24 million as a result of a reduction in administration expenses, particularly staff cost.

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 surged 34.9% to RM160.34 million as compared to RM118.88 million recorded in the preceding quarter. The higher revenue reported in the current quarter was mainly attributed to the higher sales volume during the Christmas festive season and year-end promotion sales.

For the current quarter under review, the Group's PBT substantially improved to RM21.30 million as compared to RM2.65 million in the preceding quarter ended 30 September 2017. The higher profit before tax was attributed to higher sales generated during the festive season and year-end promotion sales held in December 2017. Although the revenue improved by RM41.46 million or 34.9% but the operating expenses only increased by 5.0% which boost the Group's PBT improved by RM18.65 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.