Best Mart 360 Holdings Limited announces 2018- 2019 Annual Results

Revenue and net profit� increased by 19.8% and 34.0% YoY respectively Proposed a final dividend of HK6.0 cents per share

 

Hightlights:

• Revenue increased by
  19.8% to approximately HK$1,288.5 million.
• Gross profit increased
  by 26.9% to approximately HK$434.4 million, gross profit margin increased by
  1.9 percentage point to 33.7%.
• Netting off one-off
  non-recurring listing expenses, profit attributable to owners of the Company increase
  by 34.0% to approximately HK$780 million.
• As at 31 March 2019,
  the Group operated a total of 89 chain retail stores in Hong Kong (as at 31
  March 2018: 70).
• Basic earnings per share
  was 7.4 cents. The Board recommended the payment of final dividend of HK6.0
  cents per share.

Financial Highlights:

	For the year ended 31 Mar
HK$’000	2019	2018	Change
Revenue	1,288,479	1,075,930	+19.8%
Gross profit	434,440	342,289	+26.9%
Gross profit margin	33.7%	31.8%	+1.9 p.pt.
Profit attributable to owners of the Company (Netting off one-off non-recurring listing expenses)	78,013	58,235	+34.0%
Basic earnings per share (HK cents)	7.4	7.1	+4.2%

HONG KONG, CHINA –
Media OutReach - 27 June 2019 - Best Mart
360 Holdings Limited

(“Best Mart 360” or the “Company”, together with its subsidiaries, the “Group”;
stock code: 2360.HK), the second largest leisure food retailer in Hong Kong [1] ,
announced its annual results for the year ended 31 March 2019 (“Financial Year”).
During the financial year under review, the revenue recorded by the Group
amounted to approximately HK$1,288,479,000, representing an increase of
approximately 19.8% as compared to approximately HK$1,075,930,000 for the year
ended 31 March 2018. The increase was mainly attributed to the combined effects
of same-store sales growth and the increase in the number of retail stores, as
well as the improvement in the Group’s procurement capabilities in sourcing
products with competitive prices that are attractive to the customers.

During the financial
year under review, profit attributable to owners of the Company was approximately
HK$59,728,000 (2018: approximately HK$53,599,000), representing an increase of
approximately 11.4%. Netting off the incurrence of the one-off non-recurring listing
expenses, the profit attributable to owners of the Company for the year ended
31 March 2019 would be approximately HK$78,013,000, which represented an increase
of approximately 34.0% as compared with approximately HK$58,235,000 for the
year ended 31 March 2018.

During the financial
year under review, basic earnings per share was 7.4 cents (2018: 7.1 cents). The
Board recommended the payment of final dividend of HK6.0 cents per share.

BUSINESS REVIEW

Same-Store Sales
Performance

The growth in revenue
of the Group was not only driven by the increase of the number of the Group’s
retail stores, but also by the Group’s capability to grow its sales within the
existing retail stores. The Group assesses its growth within the existing retail
stores by calculating the same-store sales growth, which compares revenue
derived from the retail stores that were in operation throughout the financial
periods compared. The Group consecutively achieved same-store sales growth
during the past three financial years. During each of the three financial years
ended 31 March 2019, the management had taken cautious approach in regulating
and controlling the balance between realizing same-store sales growth and
procuring the growth of gross profit margin in accordance with market trend and
condition so as to achieve optimal business performance and operating results
for the Group.

	For the year ended 31 Mar
	2016	2017	2017	2018	2018	2019
No. of same-store	18		26		45
Same-store sales (HK$’000)	268,034	271,461	400,656	435,722	751,335	802,265
Same-store sales growth rate	1.3%		8.8%		6.8%

Gross Profit and Gross
Profit Margin

Gross profit of the
Group for the year ended 31 March 2019 was approximately HK$434,440,000, while
gross profit of the Group for the year ended 31 March 2018 was approximately
HK$342,289,000. During the financial year under review, gross profit margin of
the Group was approximately 33.7%, representing an increase of approximately
1.9 percentage points as compared with approximately 31.8% for the year ended
31 March 2018. The increase in gross profit margin was mainly attributed to (i)
the Group’s continual effort in sourcing products directly from more upstream
suppliers; (ii) the discount from suppliers as a result of bulk purchase which
was benefited from better economy of scale with the Group’s continuous
expansion of retail network and hence the scale of purchases; and (iii) the
effective pricing policy implemented by the Group.

Chain Retail Stores

As at 31 March 2019,
the Group operated a total of 89 chain retail stores in Hong Kong (as at 31
March 2018: 70). During the financial year under review, the Group opened 28 new
stores and closed nine retail stores due to consolidation of business of stores
in proximity or upon expiration of the respective lease term.

As at 31 March 2019,
the 89 retail stores of the Group consisting of 17 retail stores located in
Hong Kong Island, 33 retail stores located in Kowloon and 39 retail stores
located in New Territories and 32 retail stores situated at street-level, 50
retail stores situated at shopping arcades of community or residential
districts and seven retail stores situated at various traffic hubs that are
easily accessible by tourists, which spanned over all of the 18 districts in
Hong Kong.

Rental expense for
retail stores was approximately HK$132,919,000 for the year ended 31 March
2019, representing an increase of approximately 18.2% as compared with
approximately HK$112,472,000 for the year ended 31 March 2018. The percentage
of rental expense of retail stores to sales revenue for the year ended 31 March
2019 was approximately 10.3%, which was slightly lower than that of
approximately 10.5% for the year ended 31 March 2018.

Employees

Employees are crucial
to the sustainable development of the Group’s business, in particular,
front-line staffs constituted material labour force to the Group’s retail business.
The staff costs (excluding the Directors’ emoluments) for the year ended 31
March 2019 amounted to approximately HK$119,373,000 (2018: approximately
HK$87,676,000).

The Products

For the year ended 31
March 2019, the Group offers a total of 3,261 SKUs of products (for the year
ended 31 March 2018: 3,427 SKUs) from suppliers principally from overseas
markets, such as Japan, Europe, the United States, Korea and countries in the South
East Asia, and brand owners or importers in Hong Kong.

For the year ended 31 March
2019, approximately 41.5% of the products were procured from suppliers and brand
owners or importers in Hong Kong (for the year ended 31 March 2018: approximately
41.0%), while the share of import products from Japan, Europe and the United
States amounted to approximately 16.4%, 13.9% and 10.7% respectively of the whole
procurement (for the year ended 31 March 2018: approximately 16.1%, 11.8% and
15.6% respectively).

As at 31 March 2019,
the total inventories of the Group amounted to approximately HK$132,839,000
(2018: approximately HK$100,162,000), representing an increase of approximately
32.6% which was mainly due to the increase in the number of retail stores in
the financial year under review resulting in the increases in both in-store
inventories and inventories in warehouses.

Besides, the Group also
actively pursues suitable opportunity in developing private label products that
on one hand allow the Group to capture advantages of pricing and   exercise higher level of quality control on
its products and on the other hand further uplift its brand awareness and
market visibility. As at the date of this announcement, the Group has launched
seven private label brands of products, including wet tissues, chestnuts, canned
abalone, dried fruits, aloe gel and pork jerky.

Membership Scheme

Given that the retail
business of the Group is a consumer driven business, the Group placed
substantial efforts in developing and reinforcing its customer base. To this
end, the Group established and maintained a membership scheme since April 2015
in order to promote consumer loyalty, stimulate sales and further expand
customer base. During the financial year under review, the number of the
Group’s members was increased to approximately 1,268,000 as at 31 March 2019
from approximately 792,000 as at 31 March 2018, representing an increase of
approximately 60.1%.

To further popularise
and elevate the Group’s brand positioning and brand recognition the market and
further expand members’ coverage of the Group, the Group launched its mobile
app in March 2019 to strengthen its capability in instant messaging as communication
channel with the public and its members. By the Group’s mobile app, the general
public is allowed to receive instant information through mobile devices for the
Group’s promotional offers, selective products promotion, retail shops network
and member privileges and its members are able to check their reward points
recorded and redeem their reward points through mobile devices instantly and
thereby enhance customer shopping experience and purchasing pleasure with the
Group. Since the launch of the mobile app in March 2019, approximately 93,000
members had been registered through the Group’s mobile app up to 25 June 2019.

OUTLOOK

Looking ahead, the
Group is prepared to expand its business scope and market influence and to
further uplift its market position by (i) expanding the Group’s business scale
by opening additional retail stores in Hong Kong; (ii) exploring the
opportunity to penetrate into other retail markets in the Greater China region
should suitable opportunity arises; (iii) continuously optimizing the Group’s
supply chain and further refining the Group’s procurement capabilities by
identifying additional suppliers for products with quality and uniqueness and
by lowering procurement costs through sourcing from more upstream suppliers for
increasing the Group’s competitiveness in the sector; (iv) accelerating the
pace of developing additional private label products that intensifies proprietariness
of the Group’s products which provide both costs advantages and quality control
and maximize customers’ loyalty and uplift the competitive strengths of the Group;
(v) expanding the dimension of the Group’s marketing efforts to further enhance
the Group’s corporate image and to promote the Group’s products; (vi) pursuing
digital transformation of the Group’s retail operation with a view to provide
customers with progressive shopping experience accustomizing digital
transformation in New Retail Era; (vii) continuously improving the Group’s
operational efficiency by upgrading existing information technology systems and
adopting new information technology systems for streamlining operation process
and reducing operational costs; (viii) pursuing higher level of systematical
management of retail stores; and (ix) increasing staff training for enhancing
service quality.

Mr. Hui
Chi Kwan, Chief Executive Officer of the Group,
said, “During the
financial year under review, the Group managed to maintain sustainable growth
in both revenue and profit and had demonstrated our resilience in operating satisfactorily
with pressure despite sailing under the midst of economic uncertainties that affected
overall consumption sentiment due to the outburst of US-China trade tension in the
second half of year 2018. We are committed to strengthen our core capabilities
to keep on improving business performance and operating results so as to
maintain sustainable growth of the Group and to present satisfactory results
and bring favourable returns to our shareholders.”

About Best Mart 360 Holdings Limited

Best Mart 360 Holdings Limited, the second largest leisure food retailer
in Hong Kong
for the year ended 31 March 2018, mainly operates
chain retail stores under the brand “Best Mart 360?”. It offers wide collection
of imported prepackaged leisure foods and other grocery products, principally
from overseas. The Group’s business objective is to offer “Best Quality” and “Best
Prices” products to customers through continuous efforts on global procurement
with a mission to provide comfortable shopping environment and pleasurable
shopping experience to customers. As at 31 March 2019, the Group operates 89
retail stores that are strategically located at 18 districts in Hong Kong.