SINGAPORE (Feb 10): Courts Asia, which received a buyout offer from Japanese electronics retailer Nojima Corporation last month, reported losses for the nine months (9M) ended Dec widened to $5.4 million after reversing into a loss $171,000 in 3Q, compared to a profit to $3.5 million.
See: Courts Asia gets 20.5 cents per share offer from Tokyo-listed Nojima
Revenue from sales of goods and other services dipped 2.5% to $160.7 million while revenue from service charge income fell 33.7% to $14.6 million. This resulted in a 14% drop in gross profit of $55.67 million despite cost of sales falling 2% to $119.6 million.
Other income and other gains rose 15.7% to $1.8 million while impairment losses on trade receivables narrowed 41.2% to $4.7 million. Expenses from distribution and marketing, administrative and finance all narrowed by 2.4% to 26.4%.
Geographically, Singapore, which contributed to 76.2% of the group revenue in 3Q, dipped 0.7% from a year ago mainly due to lower earned service charge income.
Malaysia, which contributed to 20.4% of the group revenue, reported a 22.2% decrease in ringgit reported sales mainly due to lower earned service charge income and lower sales of goods and other services.
Courts Asia said earned service charge income was hit by Malaysia’s introduction of the Consumer Protection (Credit Sale) Regulations 2017 (CPAA), which came into operation on Jan 1 2018. Lower sales of goods and other services was mainly due to the closure of non-performing stores during the financial period.
Indonesia, which contributed to 3.4% of group revenue, registered a 7.3% decrease revenue in rupiah terms mainly due to lower earned service charge income and infocomm sales offset by higher furniture and electrical sales. Earned service charge income and infocomm sales was lower mainly due to the tightening of credit sanctioning to manage credit cost.’
See: Courts Asia subsidiary acquires Jakarta building; terminates 2 megastore leases
In its outlook, Courts Asia said the Singapore market is bracing for growth slowdown and rising inflation. It therefore plans to drive omni-channel sales with brick-and-mortar experiential centres, new designs of furniture and leveraging on credit as its unique selling proposition.
In Malaysia, the group has closed 12 underperforming stores since April 2018, bringing the total store count down to 54. In addition, the group has tightened credit sanctioning policies.
As for Indonesia, the group has terminated its BSD Megastore building and land lease as it was “historically not profitable”, and terminated its KHI Megastore building lease while acquiring the building, as part of a restructuring of its store formats in Indonesia.
As 73.8% shareholder Singapore Retail Group (SRG) has tendered all 382 million shares in acceptance of the offer on Feb 1, the offer has been declared unconditional.
Shares in Courts Asia last traded at 20 cents on Friday, 0.5 cent below Nojima’s offer price.