How Did The Hour Glass Ltd Perform in the Latest Financial Year?

The Hour Glass Ltd (SGX: AGS) is one of the world’s leading specialty luxury watch retailers with a presence in ten key cities in the Asia-Pacific region.

On Tuesday, the company announced its financial results for the full-year ended 31 March 2018 (FY2018). Here are 11 things investors should know from the earnings announcement:

1. Revenue for the latest period came in at S$691.6 million, down 1% from S$696.1 million one year ago.

2. Gross profit for the year was S$167.1 million as compared to that of S$157.9 million in FY2017. Since the cost of goods sold fell more than the revenue decline, gross profit margin improved to 24.2% from 22.7%. The company said that it “reaped the benefits from its on-going business re-engineering that resulted in a notable improvement in the standards of its customer service delivery”.

3. Staff costs went up 3% year-on-year to S$42.8 million, but rental expenses were flat at S$29.9 million. Selling and promotion expenses declined 1% year-on-year to S$14.5 million.

4. Despite a fair value loss on investment properties as compared to a gain last year, and one-off relocation expense of S$1.5 million incurred by The Hour Glass Australia, net profit improved by 2% to S$49.8 million.

5. Consequently, earnings per share for the year increased 2% to 7.07 Singapore cents from 6.91 Singapore cents a year ago.

6. The net profit margin for FY2018 was 7.2%, up slightly from 7.0% last year.

7. As of 31 March 2018, the luxury watch retailer had S$180.5 million in cash and cash equivalents, and S$49.7 million in total debt. This gave a net cash position of S$130.8 million. In comparison, at the end of March last year, it had S$73.7 million in net cash.

8. Inventories fell from S$307.4 million last year to S$282.5 million in the latest period. Net asset value per share at the end of FY2018 stood at S$0.72, a 6% increase from S$0.68 seen a year ago.

9. Cash flow from operations soared 21% year-on-year to S$80.6 million. With capital expenditure at S$5.8 million, free cash flow was S$74.9 million for FY2018. In comparison, the group generated lower free cash flow of S$57.1 million for FY2017.

10. The board has recommended a first and final dividend of two Singapore cents per share for the reporting period, unchanged from a year ago.

11. Looking ahead, the group said that it expects consumer sentiment to stay at current levels. It added that it “will continue operating its 38 boutiques in ten key cities throughout the Asia Pacific region while working to improve its retail network, brand portfolio and customer engagement and experience”.

The Hour Glass shares ended the day at S$0.67, translating to a price-to-earnings ratio of 9.5, price-to-book ratio of 0.93 and a dividend yield of 3%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P owns shares in The Hour Glass Ltd.