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2017/18 Annual Results Corporate Presentation 27 July 2018

2017/18 Annual Results Corporate Presentation 27 July 2018. Disclaimer.

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2017/18 Annual Results Corporate Presentation 27 July 2018

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  1. 2017/18 Annual Results Corporate Presentation 27 July 2018

  2. Disclaimer This presentation and/or these materials have been delivered to you on the basis of your representation that you are a person into whose possession this presentation and these materials may be lawfully delivered in accordance with all applicable laws of the jurisdiction in which you are located and you may not, nor are you authorized to, deliver this presentation and these materials to any other person. Any representation to the contrary could result in a violation of applicable laws and may be a criminal offence. By attending this presentation or receiving these materials, you certify to International Housewares Retail Company Limited (the “Company”) and BOCI Asia Limited (the “Sole Sponsor” or the "Sole Global Coordinator") that you are a professional investor (as defined in the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) and rules made thereunder) and are a person located outside of the United States (within the meaning of Regulation S of the U.S. Securities Act of 1933, as amended (the “Securities Act”)). The information contained in this presentation and/or these materials is strictly confidential and has been prepared and provided by the Company. By attending this presentation or receiving these materials, you agree, acknowledge and/or undertake: (i) that you have read and agree to comply with the contents of this notice and disclaimer; and (ii) to maintain absolute confidentiality regarding this presentation and these materials and all the information disclosed in it. If you do not accept these conditions or give the certifications, confirmations, agreements, acknowledgements, representations and undertakings set out above and herein, please immediately return this presentation and these materials to the Company or its advisers. Any failure to comply with these restrictions may result in a violation of applicable laws, regulations or rules and material adverse consequences. It is not the intention of the Company, the Sole Sponsor, the Sole Global Coordinator or any other person to provide, and you may not rely on this presentation and/or these materials as providing, a complete or comprehensive analysis of the Company and its subsidiaries and proposed subsidiaries (collectively, the "Group"), its condition (financial or otherwise) or prospects. The information contained in this presentation and these materials has not been independently verified and is subject to verification, completion and change without notice. The information contained in this presentation and these materials is only current as of the date of this presentation and these materials. None of the Company, the Sole Sponsor, the Sole Global Coordinator and their respective affiliates, advisers, agents and representatives nor any other person is under any obligation to update or keep current the information contained in this presentation and these materials subsequent to the date thereof. 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None of the Company, the Sole Sponsor, the Sole Global Coordinator and their respective affiliates, nor any of the directors, officers, employees, shareholders, advisers, agents or representatives of the Company, the Sole Sponsor, the Sole Global Coordinator or any of their respective affiliates or any other person shall have any liability for any inaccuracy, error or omission of this presentation or these materials or their contents nor for any loss, howsoever and directly or indirectly, arising from any use of this presentation or these materials or their contents or otherwise arising in connection with this presentation and/or these materials and/or its contents. 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  3. Business Highlights • Financial Performance • Outlook and Strategies Business Review by Market Agenda 3

  4. BusinessHighlights

  5. Results Highlights Gross Profit increased 5.5% to HK$1.04B Net Profit up by 32% to HK$101M Revenue grew 5.6% to HK$2.23B Strong balance sheet with cash plus real property related assets over HK$500M Hong Kong business remained solid with 5.2% sales growth Singapore turnaround with net profit in the 6 months to Apr 18 Proposed final dividend 7.0 HK cents per share 5

  6. Physical Store Retail Network 7 Licence Stores 346 Direct-owned Stores Hong Kong: 290 stores East Malaysia: 1 stores 353 Stores as of April 2018 Australia: 2stores Singapore: 48 stores Cambodia: 3 stores Vietnam: 1 store Macau: 8 stores Number of directly-owned stores 6

  7. Financial Performance

  8. Financial Performance – FY2018 8

  9. Financial Performance – FY2018 Notes: Inventory turnover = Closing inventory / Cost of sales x 365 Trade payables turnover = Closing trade payables / Cost of sales x 365 9

  10. BusinessReview by Market

  11. New Record High Revenue Breakdown % to Group’s Revenue Revenue breakdown HK$’000 FY17 FY18 YoY: 5.6% YoY: 3.5% 2,111,001 2,039,575 87.0% 87.4% Hong Kong 11.2% 10.8% Singapore 1.8% 1.8% Macau 11

  12. Hong Kong – Strategic Focus with Solid Growth • CSSG, increase of ticket size & store relocation being key drivers for revenue growth • Sales growth without GP margin being compromised • More focused on private label development and penetration, not staying at packing & basic features but going deep to quality and brand image • Leverage on Group resources, improve 123 by Ella’’s supply chain hence smooth supply of products • For 123 by Ella, study the possibility of expansion by licencing • Keep an eye on market trends; seize the momentum and grasp opportunities • Seamless bonding between physical stores and e-platforms bring omnichannel shopping experience to customers, buying at anywhere and anytime • Keep an eye on newly developing residential areas and follow the Government housing plans to expand physical store network further 12

  13. Singapore – Turnaround in 2nd FY18 • Keep momentum in 2H FY18 and seek further improvements • Full integration with HK Head Office’s management and operation system • Continue process of closing down under-performing stores when tenancy expire and look for opening new stores at high potential areas • Improve working capital efficiency by smart inventory ordering & trading terms • Going to introduce J Fun app and Easy Buy (in-store ipanel) in Singapore to boost sales • Hold optimistic view on future development 13

  14. Outlook and Strategies

  15. Focusing in Hong Kong & Singapore 1 • Maintaining leading position in Hong Kong & looking for steadfast development in Singapore • Tightening bonds between physical stores and e-retailing platform (incl. JHCeshop, EasyBuy , J Fun App and other social network) so as to create an omnichannel retailing with our own traits • Conforming to the market trends, seizing momentum and grabbing opportuities Home Market 2nd Market 15

  16. Simple ◆ Fast Retailing : 123 by Ella 2 • Established a distinctive image of simple and fast retailing model with tidy & cozy store offering trendy & lifestyle personal items • 31 stores with on average over 3,000 SKUs offered in each store • On-going improvement of supply-chain efficiency and inventory turnover rate • Improve OEM products further and bring in fresh, trendy and exciting pieces for local customers • For expansion, study the possibility of franchise to overcome manpower issue, yet keep an eye on high potential locations for own-operated stores 16

  17. 3.1 Reinforce the leading position and sustainable growth Product Private Label Development ◆ Brand image uplift • Accelerate development of high quality but affordable private label products leveraging on our strong local knowledge of consumer preferences • Offer these private label brands across categories with significant sales in order to ensure supply security and boost margins • Not just a packaging and basic features exercise, our private label effort is a long term project aiming to develop quality brands with modern, positive image, and yet down-to-earth products that deliver good performance at an affordable price • More focused on higher-ticket items: electrical appliance, kitchenware and thermos and space-saving products so as to achieve a more effective growth on sales • Stepping up marketing efforts to elevate brand image and awareness of private labels such as Matsusho electrical appliance , EZ Cook kitchen wares, and Pole Bear thermos 17

  18. 3.2 Reinforce the leading position and sustainable growth Product New Category – in-store Health & Fitness Station • See a new category opportunity of seizing additional sales from the combined trends of an ageing population as well as consumers in general are more concerned about their health • Source and offer selective but high quality supplements, health foods, OTC medication and personal care products • Gradual plans to expand this sector, increasing the reach of these products via core ideas of affordable prices and shopping convenience • Established this new category in 29 stores.  Currently in the process of studying how to extend to a further 100 outlets 18

  19. 3.3 Reinforce the leading position and sustainable growth Retail Operation System ◆Talents ◆ Teamwork ◆ Customer-oriented • Study of and prepare for total uplift and standardization of our management, operation and control processes by installing an ERP system • Tailor training programs for retail talents so as to build talent pipelines for the sustainable development of the Group • Align staff personal interests with those of the Group, shareholders and customers by setting up effective KPIs • Foster team work spirit and customer-oriented culture 19

  20. Network Expansion Plan and CAPEX Planned store expansion & estimated capital expenditures 20

  21. Q & A

  22. Thank You!

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