Business Reviews
(Extracted from Annual Report 2012)
Overview of financial results for the year ended 31 March 2012 ("FY2012")
The Group's revenue decreased by S$41.8 million from S$426.4 million in the previous financial year ended 31 March 2011 ("FY2011") to S$384.6 million for the year under review. The decrease in revenue was mainly due to the Group's strategy to redeploy our limited resources to shorter cash conversion cycle business segment (retail and retail franchising businesses), the closure and scaling down of operations in Europe which was adversely affected by the European debt and economic crisis and overall global economic uncertainty.
As the retail business generated a higher gross profit margin, despite the drop in the Group's turnover, gross profit increased by S$8 million from S$74.9 million in FY2011 to S$82.9 million in FY2012, representing a margin of 17.6% in FY2011 compared to 21.6% in FY2012.
The Group delivered improved results via reducing its loss before tax by $24.7 million from S$37.3 million in FY2011 to $12.6 million for FY2012. The improved results were mainly due to the improved gross profit margin, offsetting the effect of lower revenue and lower operating cost, due to continuing cost cutting measures. The results for FY2011 had included some one-off items arising from the Scheme adjustments, including a write back of S$75.2 million from extinguishment of debts which was offset by S$63 million provision for potential liabilities arising from adjudication of disputed and contingent claims and other Scheme-related expenses and S$10.9 million of Scheme-related professional fees.
Restructuring expenses and professional fees - related to the Scheme, declined sharply to S$1.5 million from S$10.9 million a year earlier. Including restructuring expenses and professional fees as well as the foreign exchange loss, loss from operations of the Group totalled S$7.7 million in FY2012, a vast improvement from S$103.9 million a year ago.
The Group recorded foreign exchange loss of S$6.2 million in FY2012, a 41.3% increase from S$4.4 million in FY2011, mainly due to translation of subsidiaries' foreign currency loans to local currency.
Our cash flows strengthened with cash and cash equivalents standing at S$11.4 million as at 31 March 2012 as compared to S$8.1 million as at 31 March 2011.
The Group has also improved its financial position since FY2011. Loss per share based on share capital base of 816,541,501 shares was 1.80 cents in FY2012, a 56.7% improvement from 4.16 cents in FY2011.
Performance by Geographical segments
As a result of the continuing working capital constraints coupled with the global economic uncertainty arising from the Euro crisis, the business turnover for FY2012 decreased across all geographical regions, with Europe being the most affected. Since the last financial year, the Group has started scaling down or closing its European operations.
ASEAN region contributed a lower turnover of S$248.4 million in FY2012, as compared to S$262.3 million in FY2011, a decrease of S$13.9 million; turnover for East Asia and other countries decreased by S$10.4 million from S$97.0 million in FY2011 to S$86.6 million in FY2012; turnover for Africa and Middle East decreased by S$3.1 million from S$26.9 million in FY2011 to S$23.8 million in FY2012; and turnover for CIS, Russia and Eastern Europe decreased by S$14.4 million from S$40.2 million in FY2011 to S$25.8 million in FY2012.
Retail, Distribution and Trading Segment
Our retail and distribution, and trading business segments continued to form the bulk of the Group's revenue, contributing S$381.4 million and $424.4 million, for FY2012 and FY2011, respectively, or more than 99% of the total revenue. Of this, our Akira and private label business contributed S$129 million as compared to S$172.3 million in FY2011.
Business Strategies
Going forward the Group intends to leverage on its core strengths in sourcing, trading and distribution network. The Group will also focus on growing its core subsidiaries in the ASEAN region especially in retail and retail franchising. Given the working capital constraints, the Group will focus on businesses which are less working capital-intensive, yet able to yield higher profit margin and faster cash flow generation. The Group will make efforts to further strengthen our house brand AKIRA, emphasize on product design, innovation and quality.
The Group remains fully committed to complete Big Box on schedule and will continue to be on a lookout for new potential partners.