2018/19 Interim Results Corporate Presentation

20 December 2018

Stock code: 1373

International Housewares Retail Company Limited 2018/19 Interim Results

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2

Stock code: 1373

International Housewares Retail Company Limited 2018/19 Interim Results

Agenda

3 International Housewares Retail Company Limited 2018/19 Interim Results

Highlights & Financial Results

Development Projects

Outlook &Strategies

4 International Housewares Retail Company Limited 2018/19 Interim Results

Highlights & Financial Results

Stock code: 1373

International Housewares Retail Company Limited 2018/19 Interim Results 5

Results Highlights

5

Profit attributable to owners increased

by 24% to HK$48.8m

Revenue grew 2.2% to HK$1.08b

Singapore 6% CSSG

Hong Kong business remains solid with 3.1% sales growth

Cash & Bank Balance

HK$415 M

Proposed Interim divided 5.3 HK cents

per share

Gross Profit increased 3.2%

Stock code: 1373

International Housewares Retail Company Limited 2018/19 Interim Results

Retail Network

6

FY2016 FY2017 FY2018 1H FY2018 Net change

Hong Kong 277 290 290 295 +5

Singapore 62 57 48 46 -2

Macau 8 8 8 7 -1

Number of directly-owned stores

Hong Kong: 295 stores

Macau: 7 stores

Singapore: 46 stores

East Malaysia: 1 store

Australia: 2 stores

Cambodia: 3 stores

Vietnam: 1 store

7 Licence Stores 348 Direct-owned Stores

Stock code: 1373

International Housewares Retail Company Limited 2018/19 Interim Results

For the six months to Oct 2018 Oct 2017

Turnover (HK$’000) 1,083,650 1,060,007

Gross Profit (HK$’000) 506,078 490,306

Net profit from Hong Kong

Business (HK$’000) 51,142 44,088

Profit attributable to equity

holders (HK$’000) 48,831 39,378

Key ratios

Operation profit Margin 5.4% 4.2%

Net profit margin 4.3% 3.4%

Total Dividend

Interim dividend (HK cents) 5.3 5.2

Payout Ratio 78% 95%

Financial Performance – 1H FY2019

7

(HK$’000) Oct 2018 Oct 2017

Capex in the 6 months to Oct 10,201 14,110

Property acquired (capex) in the

6 months to Oct -- 36,889

Cash & cash equivalents as of

Oct 415,101 386,013

Inventory Turnover days (1) 73 77

Trade Payable Turnover days (2) 44 43

Notes:

1. Inventory turnover = Closing inventory / (Cost of sales x2) x365

2. Trade payables turnover = Closing trade payables / (Cost of sales x2) x365

Stock code: 1373

International Housewares Retail Company Limited 2018/19 Interim Results

Revenue Breakdown

Revenue breakdown

8

Macau

Singapore

Hong Kong 87.9%

10.5%

% to Group’s Revenue

1.6%

HK$’000

1,844,576 1,941,285

923,151 952,019

228,073 248,841

119,470 113,758

FY2017 FY2018 IH FY18 IH FY19

Hong Kong Singapore Macau

2,111,001

2,230,102

1,060,007 1,083,007

9 International Housewares Retail Company Limited 2018/19 Interim Results

Development Projects

Stock code: 1373

International Housewares Retail Company Limited 2018/19 Interim Results

Accelerate OEM Development. Create Anchor House Brands

10

House Brand

Consistent Image

across 450+ SKUs

Modernize Packaging -

boost instore visibility &

strengthen USPs

communication

“Re-Japanization” –

New Design, Old Values

Examples of new artwork :

Stock code: 1373

International Housewares Retail Company Limited 2018/19 Interim Results

Accelerate OEM Development. Create Anchor House Brands

11

House Brand

Consistent Image

across 450+ SKUs

Modernize Packaging -

boost instore visibility &

strengthen USPs

communication

“Re-Japanization” –

New Design, Old Values

Stock code: 1373

International Housewares Retail Company Limited 2018/19 Interim Results

Accelerate OEM Development. Create Anchor House Brands

12

House Brand

New Image, Positioning

Positive Disruption

Compelling Value Equation

Hero Products Focus

Extend Range

From 22 to 45 (2019)

Boost Marketing &

Publicity

Create Brand Content Digital Assets,

Support Search

Stock code: 1373

International Housewares Retail Company Limited 2018/19 Interim Results

Accelerate OEM Development. Create Anchor House Brands

13

House Brands

New Opportunity

Incremental, Modern

Lifestyle Category

Positive Space Efficient

Constant Improvement

Launch Dec-Jan

Phase 1 : basic staple range

Future expansion : more wireless, more tech items

2019 Projects Refresh the brands, Update Packaging

& Hero Products

Stock code: 1373

International Housewares Retail Company Limited 2018/19 Interim Results

Global Imported Goods : New Categories, Significant Impact

14

Global Imported Goods

Significant Sales Impact

Incremental Sales

Currently : 10% of sales

Traffic Booster

Fast Turn Inventory

Expand the reach of our direct sourcing – better prices, more

choices, quicker speed

Complementary to the JHC setup

Leverage sourcing strength

Convenience Booster for our customers

Categories : Personal Care, Snacks, Home-care, where the

main customer profile overlap strongly with JHC core

customers

New Learnings, New Challenges to handle & anticipate

Logistics

Store configuration

Range & Space rationalization

Stock code: 1373

International Housewares Retail Company Limited 2018/19 Interim Results

Logistics & Warehousing Developments

15

New Logistics Capabilities

Target :

Better Service, Reduce Stock Holding (offense)

Control Costs (defense)

Cross Dock Projects with key suppliers : minimize stock holding in JHC, and through

EZBuy orders, trigger delivery.

Cross Dock Format also allows suppliers benefit of Listing Full Range of products

broaden the range on offer without increasing inventory

Explore Setting up new Logistics Entity in ShenZhen with 3PL Partner in 前海 Bonded

Port Logistics zone that can provide incremental capabilities :

Next-Day Delivery

Direct Home Delivery capability to support & boost E-Commerce

Extended Hour Operations during peak periods

Allow storage rationalization to optimize storage & operating costs

Greater Flexibility to enable Future Opportunities :

Damage returns & Repairs management

Packing & Labelling operations

Selling products to mainland China domestic market

Stock code: 1373

International Housewares Retail Company Limited 2018/19 Interim Results

Omni Channel Retailing

16

New Integrated Channel

Unique Positioning : “Convenience百货”

wide product range of items on offer

shop at place & time of your convenience (online/offline)

Pick Up at 260+ JHC stores near you, or use Home-Delivery.

Enable new business incremental to goods :

Sell Vouchers & Coupons of established brands in HK

Sell Services

Leverage our customer footfall, and engagement channels (JFun,

EZBuy-Panel, FB)

Better management & use of store space :

“shared inventory” concept for bulky items, where stores hold 1 unit

as display set and orders are placed on EZ-Buy panel.

Cross-dock concept where supply is triggered only when there is

demand.

Stock code: 1373

International Housewares Retail Company Limited 2018/19 Interim Results

New & Incremental Business – B-to-B Collaborations

17

JHC has a Ready-Made Exposure & Sales Platform for B-to-B Parthers

We do more than just sell Vouchers & Gift Certificates

We create Brand Awareness & Drive Sales

We provide instant wide exposure & marketing for B-to-B partners, using our

marketing, advertising and publicity network :

260+ shops exposure immediate reach to more than 1.2m

Households

Comprehensive Marketing Support to drive Partner sales

Instore POS, I-Panel Banner & Staff Recommendation

EShop Banners, EDM, FB Advertising, Social Media Post

JFun Push Mail & Promotion to members in JFun App

Newspaper Ads

Clean & Efficient Management of Inventory using E-Platform

1. Pre-Order , 2. Collect, 3. Replenish Stock

Win - Win Opportunity for B-to-B partners

Promotion in JFun APP Highlight in eShop

Feature in EDM

& instore Leaflets

18 International Housewares Retail Company Limited 2018/19 Interim Results

Outlook & Strategies

Stock code: 1373

International Housewares Retail Company Limited 2018/19 Interim Results

Focusing in Hong Kong & Singapore

19

With infrastructure of JHC omni-channel retailing

being in place, to provide customers with blended

online & offline shopping experience

Ongoing effort on operation efficiency and

customer shopping experience improvement

through adoption of technological innovations

Maintaining leading position in Hong Kong &

steadfast development in Singapore

Accelerating OEM products and private label

development

2nd Market

Home Market

Stock code: 1373

International Housewares Retail Company Limited 2018/19 Interim Results

Simple ◆ Fast Retailing : 123 by Ella

20

Distinctive and fresh brand, bearing the imagine of simple & fast retailing

with tidy & cozy store offering trendy & lifestyle personal items.

32 stores spreading in different locations both of on street level and in mall

Leverage on the Group’s sourcing power to introduce more new and fresh

items (incl. imported FMCG & leisure food) to our customers

Exploring the chance of expansion through a franchise programme

Stock code: 1373

International Housewares Retail Company Limited 2018/19 Interim Results

Reinforce the leading position and sustainable growth

21

Product Online & Offline

Offer blended

shopping experience

of both online &

offline under an

increasing demand

for convenience and

flexibility by

customers

Plan to equip Easy

Buy with mobile

payment solution

Talents

Retain and attract

retail talents

Tailor training

programs for staff’s

further advancement

in & contribution to

the Group

Align staff’s personal

interests with those of

the Group and

shareholders by

setting up effective

KPIs.

System & Supply Chain

Embedded intelligence

software to allow

automated decision

process, e.g. product

replenishment

Installation of new ERP

system in order to have

a total solution for

operation efficiency

Accelerate OEM

product development

and private brand

image building

Stepping up

marketing effort to

enhance the presence

of private labels

Further enlarge global

sourcing products of

int’l brands - personal

care, household

chemical & leisure

food

Stock code: 1373

International Housewares Retail Company Limited 2018/19 Interim Results

Network Expansion Plan and CAPEX

Planned store expansion & estimated capital expenditures

22

Store expansion (Net increase of number of stores)

Actual at

31 Oct 18

Net increase

2HFY2019

Net increase

FY2020

Hong Kong (incl. Ella) 295 5 10

Singapore 46 2 2

Macau 7 1 1

Total: 348 8 13

Estimated capital expenditure HK$ million

2HFY2019 FY2020

New store openings 9 19

Ongoing renovations of existing stores 9 19

Others (incl. improvements to logistics & IT) 30 5

23 International Housewares Retail Company Limited 2018/19 Interim Results

Q & A

24 International Housewares Retail Company Limited 2018/19 Interim Results

Thank You!

Stock code: 1373