SHISHI, China, June 3, 2019 /PRNewswire/ -- KBS
Fashion Group Limited ("KBS" or the "Company") (NASDAQ: KBSF), a
leading fully-integrated casual menswear company in China,
today announced its unaudited financial results for the first
quarter ended March 31, 2019.
First quarter of 2019 Financial Highlights
- Net revenues increased by 3.5% to $4.62 million for
the first quarter of 2019 from $4.46 million for the same
period of last year.
- Gross profit increased by 48.3% to $1.61 million for
the first quarter of 2019 from $1.09 million for the same
period of last year. Gross margin was 34.9% for the first quarter
of 2019, compared to 24.0% for the same period of last
year.
- Operating profit increased by 127.0% to $0.54 million for the first quarter of 2019 from
operating loss of $2.01 million for
the same period of last year.
- IFRS net income was $0.31 million, or $0.135 earnings
per basic and diluted share, for the first quarter of 2019,
compared to net loss of $1.90 million,
or $0.886 loss per basic and diluted share, for the same
period of last year.
Mr. Keyan Yan, Chief Executive Officer of the Company
commented, "we are very pleased with our operating and financial
results for the first quarter, which demonstrated strong
profitability given the first quarter being a slow season. The
management team is working diligently to keep strong momentum by
continuing to improve our operational efficiencies and increase our
sales from different channels. Looking forward to the remaining of
2019, we are excited about the sales potential from the recently
signed contract and integration of our potential acquisition of
Tribe which is expected to put us in a prominent position in the
smart clothe technology market. We are confident about our ability
to outperform in 2019 and beyond."
First quarter of 2019 Financial Results Analysis
For the Three Months Ended March 31, 2019
|
|
($ millions,
except per share data)
|
2019
|
|
2018
|
|
%
Change
|
Revenues
|
4.62
|
|
4.46
|
|
3.5%
|
Distribution
network
|
3.04
|
|
3.91
|
|
-22.3%
|
Corporate
stores
|
0.17
|
|
0.15
|
|
13.3%
|
OEM
|
1.40
|
|
0.40
|
|
250.0%
|
Gross
profit
|
1.61
|
|
1.09
|
|
48.3%
|
Gross
margin
|
34.9%
|
|
24.2%
|
|
44.3%
|
Operating income
(loss)
|
0.54
|
|
-2.01
|
|
-127.0%
|
Operating (loss)
margin
|
11.8%
|
|
-45.0%
|
|
-126.1%
|
IFRS net income
(loss)
|
0.31
|
|
-1.90
|
|
-116.3%
|
IFRS Earnings (loss)
per share
|
0.135
|
|
-0.886
|
|
-115.3%
|
Revenues
- Total revenues increased by $0.16 million, or 3.5%,
to $4.62 million for the first quarter of 2019
from $4.46 million for the same period of last year. The
increase was mainly contributable to the increased orders from OEM
segment.
|
|
For the Three
Months Ended March 31, 2019
|
|
|
2019
|
|
2018
|
($
millions)
|
|
Revenues
|
|
Gross
Profit
|
|
Gross
Margin
|
|
Revenues
|
|
Gross
Profit
|
|
Gross
Margin
|
Distribution
network
|
|
3.04
|
|
0.97
|
|
31.9%
|
|
3.91
|
|
0.89
|
|
22.9%
|
Corporate
stores
|
|
0.17
|
|
0.07
|
|
37.4%
|
|
0.15
|
|
0.06
|
|
39.0%
|
OEM
|
|
1.40
|
|
0.58
|
|
41.2%
|
|
0.40
|
|
0.14
|
|
33.7%
|
Total
|
|
4.62
|
|
1.61
|
|
34.9%
|
|
4.46
|
|
1.09
|
|
24.4%
|
Revenues from the Company's distribution
network decreased by $0.87 million, or 22.3%,
to $3.04 million for the first quarter of 2019
from $3.91 million for the same period of last year.
Distribution network contributed 65.9% of total revenues for the
first quarter of 2019, compared to 87.8% for the same period of
last year. The Company's distributor network consisted of
11 distributors in 10 provinces during the first quarter
of 2019, compared to 14 distributors in 12 provinces during the
same period of last year. Most of these distributors, either
directly or through their sub-distributors, operate KBS-branded
stores. Some wholesale distributors sold the products to
multi-branded stores and online stores. As of March 31, 2019, there were 32 KBS-branded
franchise stores operated by our distributors and sub-distributors,
primarily in second and third tier cities. KBS products distributed
to the fourth and fifth tier cities are primarily sold in
multi-branded department stores and online shops. As a comparison,
we had 39 KBS-branded franchise stores operated by our
distributors and sub-distributors as of March 31, 2018.
The following table lists by regions the number of retail stores
operated by distributors and sub-distributors as of March 31, 2019:
|
|
|
|
Location
|
|
As of March 31,
2019
|
|
Fujian
|
|
6
|
|
Guangdong
|
|
2
|
|
Guangxi
|
|
3
|
|
Jiangsu
|
|
4
|
|
Anhui
|
|
2
|
|
Chongqing
|
|
4
|
|
Tianjin
|
|
3
|
|
Hebei
|
|
4
|
|
Sichuan
|
|
4
|
|
Total
|
|
32
|
|
Revenues from corporate store sales increased
by $0.02 million, or 13.3%, to $0.17 million for the
first quarter of 2019 from $0.15 million for the same
period of last year. We currently have one corporate store operated
directly by us, sales of which accounted for 3.8% of total revenues
for the first quarter of 2019, compared to 5.5% for the same period
of last year. The increase in corporate store sales was due to the
overall improvement on products this year.
Revenues from OEM sales increased by $1.00
million, or 247%, to $1.40 million for the first quarter
of 2019 from $0.4 million for the same period of last
year. OEM accounted for 30% of total revenues for the first quarter
of 2019, compared to 7% for the same period of last year. The OEM
segment is comprised of products that are designed by the customers
and manufactured by the Company. The increase in revenues from OEM
sales was primarily due to the increased orders from our two major
customers: Hangzhou Ziyin and Hangzhou Yiyuan
Cost of Sales and Gross Profit
Total cost of sales decreased by $0.37 million, 11.0%,
to $3.00 million for the first quarter of 2019
from $3.38 million for the same period of last
year. The decrease in cost of sales was primarily due to
higher products pricing strategy this year comparing same
period of last year.
Total gross profit increased by $0.52 million, or
48.3%, to $1.61 million for the first quarter of 2019
from $1.09 million for the same period of last year.
Gross profits for distribution network, corporate stores and OEM
were $0.97 million, $0.07 million, and $0.58
million, respectively, for the first quarter of 2018, compared
to $0.89 million, $0.06 million, and $0.14 million,
respectively, for the same period of last year.
Overall gross margin was 34.9% for the first quarter of 2019,
compared to 24.4% for the same period of last year. On a segment
basis, gross margins for distribution network, corporate stores and
OEM were 31.9%, 37.4%, and 41.2%, respectively, for the first
quarter of 2019, compared to 22.9%, 39.0%, and 33.7%, respectively,
for the same period of last year. The increase in overall gross
margin was due to the rolling out of our new products. Our products
of new styles have gained additional advantages in pricing which
helped increase our gross margin during the first quarter of
2019.
Operating Expenses and Operating Income (Loss)
Distribution and selling expenses decreased by $0.43
million, or 59.1%, to $0.30 million for the first
quarter of 2019 from $0.73 million for the same period of
last year. The decrease in distribution and selling expenses was
mainly due to the Company's new cost effective business strategy,
resulting in reduced cost in marketing and advertising as well as
the labor. Additionally, the Company adjusted the allowance
standard for the dealer rental allowance to save the cost.
Administrative expenses decreased by $1.53 million, or
63.8%, to $0.87 million for the first quarter of 2019
from $2.40 million for same period of last year. The
decrease in administrative expenses was mainly due to the Company's
new business strategy plan resulting in reduced labor salary,
R&D expenses, and outsourced marketing team expanse. The
depreciation expense was reduced relatively after the
impairment of our Anhui
facility at the end of 2018.
Other operating expenses, including other income and other gains
and loss, totaled $95,314 for the first quarter of 2019,
compared to $30,354 for the same period of last year.
Operating profit was $0.54 million for the first quarter
of 2019, compared to operating loss of $2.01 million for
the same period of last year. Operating profit margin was 11.8% for
the first quarter of 2019, compared to operating loss margin of
45.0% for the same period of last year.
Income (Loss) before Income Taxes
Profit before income taxes was $0.31 million for the
first quarter of 2019, compared to loss before taxes of $2.04
million for the same period of last year.
Income tax expense was $0.22 million for the
first quarter of 2019, compared to income tax
gain of $0.14 million for the same period of last
year.
About KBS Fashion Group Limited
Headquartered in Shishi, China, KBS Fashion Group Limited,
through its subsidiaries, is engaged in the business of designing,
manufacturing, selling and distributing casual menswear through a
network of 33 KBS branded stores (as of March 31, 2019) and
over a number of multi-brand stores. To learn more about the
Company, please visit its corporate website
at www.kbsfashion.com.
Safe Harbor Statement
This press release may contain certain "forward-looking
statements" relating to the business of KBS Fashion Group Limited,
and its subsidiary companies. All statements, other than statements
of historical fact included herein, are "forward-looking
statements" in nature within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements,
often identified by the use of forward-looking terminology such as
"believes," "expects" or similar expressions, involve known and
unknown risks and uncertainties. Although the Company believes that
the expectations reflected in these forward-looking statements are
reasonable, they do involve assumptions, risks and uncertainties,
and these expectations may prove to be incorrect. Investors should
not place undue reliance on these forward-looking statements, which
speak only as of the date of this press release. The Company's
actual results could differ materially from those anticipated in
these forward-looking statements as a result of a variety of
factors, including those discussed in the Company's periodic
reports that are filed with the Securities and Exchange Commission
and available on its website (http://www.sec.gov). All
forward-looking statements attributable to the Company or persons
acting on its behalf are expressly qualified in their entirety by
these factors. Other than as required under the securities laws,
the Company does not assume a duty to update these forward-looking
statements.
For further information, please contact:
Lisa Tu
Chief Financial Officer
T: +86 158-5972-2469
E: lingsantu@hotmail.com
KBS Fashion
Group Limited
|
UNAUDITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(LOSS)
|
(Stated in US
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended March 31
|
|
|
|
2019
|
|
2018
|
|
|
|
USD
|
|
USD
|
|
|
|
|
|
|
Revenue
|
|
|
4,618,734
|
|
4,464,161
|
Cost of
sales
|
|
|
(3,004,923)
|
|
(3,376,037)
|
Gross
profit
|
|
|
1,613,811
|
|
1,088,125
|
GP ratio
|
|
|
34.9%
|
|
24%
|
|
|
|
|
|
|
Other
income
|
|
|
66,469
|
|
30,144
|
Other gains and
losses
|
|
28,846
|
|
209
|
Distribution and
selling expenses
|
|
(298,277)
|
|
(729,349)
|
Administrative
expenses
|
|
(867,496)
|
|
(2,399,251)
|
Operating
profit
|
|
|
543,353
|
|
(2,010,121)
|
|
|
|
|
|
|
Finance
costs
|
|
|
(17,210)
|
|
(25,507)
|
Change in fair value
of warrant liabilities
|
|
-
|
|
-
|
Profit before
tax
|
|
|
526,143
|
|
(2,035,628)
|
|
|
|
|
|
|
Income tax
expense
|
|
|
(215,967)
|
|
137,313
|
Profit for the
year
|
|
|
310,176
|
|
(1,898,315)
|
|
|
|
|
|
|
Other comprehensive
income
|
|
|
|
|
-Currency translation
differences
|
|
(1,486,930)
|
|
(10,189,384)
|
Total
comprehensive income
|
|
(1,176,753)
|
|
(12,087,699)
|
|
|
|
|
|
|
Attributable
to:
|
|
|
|
|
|
Owner of the
Company
|
|
(1,176,753)
|
|
(12,087,699)
|
Minority
interests
|
|
|
-
|
|
-
|
|
|
|
|
|
|
Outstanding
shares
|
|
|
2,291,632
|
|
2,141,466
|
|
|
|
|
|
|
Profit per share -
basic and diluted
|
|
0.135
|
|
-0.886
|
|
|
|
|
|
|
NON-GAAP Profit
per share-basic and dilluted
|
|
0.135
|
|
-0.886
|
|
|
|
|
|
|
|
|
|
|
|
|
KBS Fashion Group
Limited
|
Unaudited
Consolidated Statements of Financial Position
|
For the
Period ended March 31, 2019(Stated in US dollars)
|
|
|
|
|
|
|
|
|
|
2019/03/31
|
|
2018/12/31
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
|
20,229,246
|
|
21,026,103
|
Trade
receivables
|
|
|
10,556,303
|
|
8,122,223
|
Other receivables and
prepayments
|
|
547,810
|
|
855,473
|
Related parties
receivables
|
|
158,172
|
|
-
|
Inventories
|
|
|
1,344,772
|
|
1,245,800
|
Subsidies prepaid to
distributors
|
|
-
|
|
-
|
Prepayments and
premiums under operating leases
|
|
573,134
|
|
78,532
|
Land Use Rights and
Trademark
|
|
|
|
|
|
|
|
|
33,409,436
|
|
31,328,132
|
Total current
assets
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
assets
|
|
|
1,911,453
|
|
2,371,735
|
Prepayments and
premiums under operating leases
|
|
|
-
|
|
-
|
Prepayment for
construction of new plant
|
|
|
-
|
|
-
|
Prepayment for
acquisition of land use right
|
|
|
-
|
|
-
|
Construction in
progress
|
|
|
11,973,511
|
|
12,173,808
|
Property, plant and
equipment
|
|
599,989
|
|
603,503
|
Prepaid lease
payments
|
|
14,768,293
|
|
14,688,829
|
Deferred tax
asset
|
|
|
29,253,247
|
|
29,837,875
|
Total non-current
assets
|
|
|
|
|
|
|
|
62,662,683
|
|
61,166,006
|
Total
assets
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
1,092,785
|
|
1,092,785
|
Short-term
loans
|
|
|
3,865,583
|
|
5,278,460
|
Trade and other
payables
|
|
(323,233)
|
|
445,614
|
Related parties
payables
|
|
164,554
|
|
47,828
|
Income tax
payable
|
|
|
532,128
|
|
-
|
Total current
liabilities
|
|
5,331,817
|
|
6,864,685
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
5,331,817
|
|
6,864,685
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
share
capital
|
|
|
257
|
|
227
|
share
premium
|
|
|
9,135,130
|
|
8,000,561
|
Revaluation
reserve
|
|
|
184,272
|
|
184,272
|
Statutory Surplus
reserve
|
|
|
6,084,836
|
|
6,084,836
|
Retained
earnings
|
|
|
46,488,390
|
|
46,178,214
|
Foreign currency
translation reserve
|
|
(4,562,020)
|
|
(6,146,787)
|
Total
equity
|
|
|
57,330,865
|
|
54,301,321
|
|
|
|
|
|
|
Total liabilities
and equity
|
|
62,662,683
|
|
61,166,007
|
KBS Fashion Group
Limited
|
Unaudited
Consolidated Statements of Cash Flow
|
For the three
Months ended March 31, 2019 and 2018
|
USD
|
|
|
2019
|
|
2018
|
|
|
USD
|
|
USD
|
Profit before
tax
|
310,176
|
|
(1,898,315)
|
Adjustments
for:
|
|
|
|
Finance
costs
|
17,210
|
|
25,507
|
change in fair value
of warrant liabilities
|
-
|
|
-
|
Interest
income
|
(16,071)
|
|
(20,264)
|
Bad debt
allowance
|
-
|
|
-
|
Share based
compensation
|
1,134,600
|
|
(1,314,420)
|
Depreciation of
property, plant and equipment
|
209,145
|
|
400,538
|
Amortisation of
prepaid lease payments and trademark
|
3,595
|
|
3,818
|
Amortisation of
subsidies prepaid to distributors
|
-
|
|
-
|
Amortisation of
prepayments and premiums under operating leases
|
105,868
|
|
27,727
|
Provision (Reversal)
of inventory obsolescence
|
(41,469)
|
|
(14,428)
|
Provision (Reversal)
of impairment loss in prepayments
|
-
|
|
-
|
Loss (gain) on
disposal of property, plant and equipment
|
(808)
|
|
-
|
Deferred income
tax
|
-
|
|
-
|
Operating cash
flows before movements in working capital
|
1,722,246
|
|
(2,789,837)
|
(Increase) / Decrease
in trade and other receivables
|
(2,342,359)
|
|
(765,977)
|
(Increase) / Decrease
in prepayments and deferred expenses
|
233,252
|
|
1,307,245
|
(Increase) / Decrease
in related parties receivables
|
-
|
|
-
|
(Increase) / Decrease
in inventories
|
(34,008)
|
|
(1,631,454)
|
Increase / (Decrease)
in trade and other payables
|
(508,054)
|
|
(597,447)
|
Increase / (Decrease)
in income tax payable
|
534,099
|
|
-
|
Increase / (Decrease)
in related parties payables
|
-
|
|
0
|
Cash generated
from operations
|
(394,822)
|
|
(4,477,469)
|
DTA
|
|
69,711
|
|
(137,313)
|
Income taxes
paid
|
-
|
|
-
|
Net cash from
operating activities
|
(325,111)
|
|
(4,614,781)
|
Investing
activities
|
|
|
|
Interest
received
|
16,071
|
|
20,264
|
Prepayments and
premiums paid under operating leases
|
-
|
|
-
|
withdraw the
prepayments and premiums paid under operating leases
|
-
|
|
-
|
Subsidies prepaid to
distributors
|
-
|
|
-
|
Prepayment for
construction of new plant
|
-
|
|
-
|
Prepayment for
acquisition of land use right
|
-
|
|
-
|
Purchase of property,
plant and equipment and construction in process
|
(0)
|
|
(20,575)
|
CIP
movement
|
-
|
|
-
|
Intangible
movements
|
-
|
|
-
|
Prepayment on prepaid
lease payments
|
-
|
|
-
|
Proceeds on disposal
of property, plant and equipment
|
-
|
|
-
|
Net cash used in
investing activities
|
16,071
|
|
(312)
|
|
|
|
|
|
Financing
activities
|
|
|
|
Advances from
related parities
|
54,074
|
|
163,315
|
Interest
paid
|
|
(17,210)
|
|
(25,507)
|
New bank loans
raised
|
1,117,960
|
|
1,662,146
|
Payment of bank
loans
|
(1,117,960)
|
|
(1,662,146)
|
Shares
issued
|
-
|
|
-
|
Net cash used in
financing activities
|
36,864
|
|
137,808
|
|
|
|
|
|
Net increase in
cash and cash equivalent
|
(272,176)
|
|
(4,477,285)
|
Effects of
currency translation
|
(524,681)
|
|
5,306,418
|
|
|
|
|
5,282,494
|
Cash and cash
equivalents at beginning of year
|
21,026,103
|
|
25,221,323
|
|
|
|
|
|
Cash and
cash equivalents at end of year
|
|
20,229,246
|
|
26,050,456
|
View original
content:http://www.prnewswire.com/news-releases/kbs-fashion-group-limited-reports-robust-first-quarter-2019-financial-results-300860544.html
SOURCE KBS Fashion Group Limited