Courts Asia profit more than triples

Singapore

AMID a challenging retail environment in all its operating markets, mainboard-listed Courts Asia Limited reported on Wednesday a 247.6 per cent surge in full-year net profit to S$23.7 million .

For the year ended March 31, 2017, earnings per share came to 4.59 Singapore cents, up from a restated 1.29 cents for the previous year. Courts said that it has applied the new FRS 115 accounting standard issued by the Accounting Standards Council in its FY16/17 financial statements.

The main changes under FRS 115 are that revenue transactions with a significant financing component have to be adjusted using a discount rate that would be reflected in a separate financing transaction between the entity and its customer at contract inception, and a portion of revenue has to be allocated to the service obligations provided to customers. This revenue has to be deferred and recognised over the service period, Courts said.

As a result, the revenue recognition for credit sales and services under FRS 115 will have an impact on the current year's profit and prior years' retained earnings, which resulted in a restatement of reported earnings for all prior years, including the last comparative year of FY15/16.

Revenue for the 2017 fiscal year dipped 1.5 per cent to S$740.5 million. The drop came from both Singapore and Malaysian takings. Singapore revenue fell 2.7 per cent , mainly due to lower sales of goods offset by higher earned service charge income. Malaysian revenue dropped 3.1 per cent, also mainly due to lower sales of goods offset by higher earned service charge income.

Courts said that the new FRS 115 revenue recognition model would not impact the profit over the term of the contract and that there was also no impact on cash flow. Income arising from other services would be recognised over time instead of upfront at the point of sale while service charge income would be recognised using the market effective interest rate.

Courts CEO Terence Donald O'Connor said: "A portion of our business revenue is attributable to services as well as credit bundle sales, which are impacted under the new FRS 115 rule. As we deem the impact to be material, we made the decision to early adopt FRS 115 as we believe it is in the best interest of our shareholders to do so."

Courts is investing in new store openings across Malaysia and Indonesia as well as existing stores across its three operating markets. It targets to add a minimum of five new stores each in Malaysia and Indonesia by the end of FY17/18.

A final one-tier tax-exempt dividend of 1.29 cents has been declared. In the stock market on Wednesday, Courts closed trading unchanged at S$0.425.