(Extracted from Annual Report 2012)
On behalf of the Board of Directors, it is my pleasure to present TT International's Annual Report for the financial year ended 31 March 2012 ("FY2012"). Despite the challenging and difficult operating environment, I am glad to report that we have been able to record a profit from operations (before costs related to our ongoing financial restructuring and exchange losses), progress with our implementation of the Scheme of Arrangement (Scheme) and have embarked on efforts to complete the Big Box retail project. The Group is now able to concentrate on stabilizing and growing our business and operations and continues to look for suitable partners for the Big Box project.
Having emerged from a difficult period of setbacks from the Scheme related matters in the prior years, the Group is now on the path to recovery. Tremendous time and effort had been spent to stabilize the businesses and operations and strengthening the relationship with our business partners.
With limited access to additional bank credit facilities for the working capital and stringent suppliers' terms, the Group's turnover reduced S$41.8 million to S$384.6 million in current financial year, from S$426.4 million for the financial year ended 31 March 2011 ("FY2011") . This is also largely due to the hibernation of the supply chain business and the closure of operations in Europe so as to focus our efforts on retail and retail franchising business.
For FY2012, the Group recorded a small profit from operations of S$46,000 (before accounting for exchange loss of S$6.2 million and restructuring expenses and professional fees of S$1.5 million), making a significant recovery from previous year's loss from operations of S$88.6 million (excluding exchange difference of S$4.4 million; and restructuring expenses and professional fees of S$10.9 million).
The Group reduced its losses before tax by S$24.7 million from S$37.3 million in FY2011 to S$12.6 million in FY2012. The improved results were due to the higher gross profit margin, offsetting the impact of lower revenue, and lower operating expenses due to continuing cost cutting measures.
The Directors do not propose any dividend in respect of the financial year ended 31 March 2012 given the need to conserve working capital for the business.
On 25 October 2011, as part of the company's ongoing restructuring under the Scheme, outstanding Non-sustainable Debt (as determined on 18 October 2011) was converted into redeemable convertible bonds ("RCB") of an aggregate principal amount of approximately S$139,377,000. The issuance was completed on terms as set out in the Scheme Document, and issued by the Company in registered form to the Scheme Creditors on a pari passu basis.
This was a progressive step taken in the Scheme as it serves to resolve the outstanding liabilities of the Company in a manner that will be beneficial to the Company, its Scheme Creditors and, thereby, its stakeholders.
Subsequent to the financial year end, on 4 April 2012, we entered into an Investment Framework Agreement ("IFA") with an investor to raise the necessary funds needed for the completion of the Big Box project - a warehouse retail project for which approval from the Singapore Economic Development Board has already been received.
On 30 June 2012 (the Long Stop Date as defined under the IFA), we announced that the IFA had been automatically terminated because both sides could not, by the Long Stop Date, find a mutually acceptable solution in respect of certain conditions precedent in the IFA. The process of any negotiation is that it may succeed or it may not. In this case, it was not and we are disappointed. Nonetheless, the Company is fully committed to complete Big Box on schedule by early 2014, as it firmly believes the project will enhance value for all stakeholders. Moving forward, the Group will continue to be on a lookout for new potential partners.
The management is also focusing on growing the ASEAN markets, especially retail and retail franchising and some trading/distribution activities for our AKIRA and private label product. Despite the global economic uncertainty and signs of possible recession in the developed countries, we are confident that the Group will be able to overcome challenges ahead and achieve sustainable growth.
The Group intends to expand our retail Consumer Electronics business in Indonesia through opening of more franchisee stores and some own stores, and to maintain our Furniture and Furnishing business in Singapore, which is a mature market. At the same time we have strengthened our product/brand management of AKIRA and private label, for which results are starting to show.
Barring any unforeseen circumstances, the Group is expected to show stabilization of our business for FY2013.
I would like to express our appreciation to Mr Goh Chong Theng, who stepped down as Chief Financial Officer in February 2012. We are grateful for his dedicated service and invaluable contributions to TT International and in particular his role in the successful implementation of the Scheme of Arrangement as well as the issuance of the Redeemable Convertible Bonds and wish him all the best in his future endeavours.
On behalf of the Board of Directors I wish to thank all our loyal shareholders during this difficult time. I would also like to thank our valued customers, business partners, suppliers, professional advisers, and bankers for your continuing support and confidence in the Group. I would also like to highlight the dedication, patience and hard work put in by all our staff members and management over the past few years. In closing, I would like to express my sincere appreciation to my fellow Board members and shareholders of TT International for their faith and patience as we overcome the many challenges.
Sng Sze Hiang,