International Housewares Retail : ANNUAL REPORT 2017

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Corporate Profile‌

Established in 1991, International Housewares Retail Company Limited (the "Company") and its subsidiaries (collectively referred to as the "Group") is the largest houseware retail chain in Hong Kong, Singapore and Macau1. The Group offers quality houseware products through an extensive retail network comprising 366 stores in Hong Kong, Singapore, Macau, Cambodia, East Malaysia, Saudi Arabia and Australia under renowned brands including Japan

Home Centre (日本城), City Life (生活提案), Epo Gifts & Stationery (文具世代), 123 by ELLA, and Japan Home (日 本の家). Supported by extensive sourcing channels and high-margin private label products, the Group provides to

customers a full range of houseware items at competitive prices, giving them "one-stop" shopping convenience.

The Company was listed on the Main Board of The Stock Exchange of Hong Kong Limited (the "Stock Exchange") on 25 September 2013 (the "Listing Date").

1 In terms of revenue and number of stores the Group operated in the calendar year 2012 according to the Frost & Sullivan Report.

Contents

Highlights 2

Five-Year Financial Summary 2

Awards and Recognition 3

Corporate Social Responsibility 4

The Group's History 6

Chairman's Statement 8

Management Discussion and Analysis 10

Report of the Directors 14

Corporate Governance Report 30

Environmental, Social and Governance Report 40

Independent Auditor's Report 44

Consolidated Income Statement 48

Consolidated Statement of Comprehensive Income 49

Consolidated Balance Sheet 50

Consolidated Statement of Changes in Equity 52

Consolidated Statement of Cash Flows 54

Notes to the Consolidated Financial Statements 55

Corporate Information 108

International Housewares Retail Company Limited 2017 Annual Report 1 Highlights‌

The board of directors (the "Board" or "Directors") of International Housewares Retail Company Limited (the "Company" or "we") is pleased to announce the consolidated annual results of the Company and its subsidiaries (collectively referred to as the "Group") for the year ended 30 April 2017 (the "Year") prepared in accordance with the relevant requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules" and the "Stock Exchange" respectively), together with the comparative figures for the financial year ended 30 April 2016 ("2015/16").

• The Group's revenue increased by 3.5% to HK$2,111,001,000 (2015/16(1): HK$2,039,575,000).

• The Group achieved satisfactory comparable store sales growth(2) in Hong Kong of 3.0% (2015/16: 5.3%).

• The Group maintained a strong financial position with cash and cash equivalents of HK$403,753,000 (30 April 2016: HK$406,080,000).

• The Group's gross profit rose by 4.4% to HK$989,153,000 (2015/16: HK$947,577,000) and gross profit margin was up to 46.9% (2015/16: 46.5%).

• Profit attributable to owners of the Company increased 31.6% to HK$87,492,000 (2015/16: HK$66,492,000).

• The Board has resolved to recommend the payment of a final dividend of HK5.6 cents per share. Combined with the interim dividend of HK5.0 cents per share, the total annual dividend would be HK10.6 cents per share.

Notes:

1. Comparative figures for the financial year ended 30 April 2016 are shown as 2015/16 in brackets.

2. Comparable store sales growth represents a comparison between the store sales of those stores that were open throughout the years being compared.

Five-Year Financial Summary

The results, assets, liabilities and key ratios of the Group for each of the last five financial years ended 30 April are as follows:

2017 HK$'000	2016 HK$'000	2015 HK$'000	2014 HK$'000	2013 HK$'000
Financial performance Revenue	2,111,001	2,039,575	1,951,279	1,746,838	1,498,673
Operating profit	96,638	73,494	95,575	164,418	129,106
Profit before income tax	97,246	74,798	100,068	167,597	128,108
Profit for the year	76,496	54,156	79,239	143,099	103,169
Financial position Cash and cash equivalents	403,753	406,080	447,376	466,432	111,513
Total assets	966,670	970,090	1,034,584	999,690	567,077
Total liabilities	(265,782)	(275,321)	(302,337)	(281,010)	(284,083)
Net assets	700,888	694,769	732,247	718,680	282,994
Key ratios Gross profit margin	46.9%	46.5%	46.3%	46.5%	46.1%
Revenue growth	3.5%	4.5%	11.7%	16.6%	23.7%
Comparable store sales growth(2) in Hong Kong	3.0%	5.3%	8.2%	10.0%	12.1%

2 International Housewares Retail Company Limited 2017 Annual Report