Financial Year 2006/2007
Dear Shareholders,
2007 was an outstanding year for F J Benjamin. Our Group entered a new and exciting growth phase, and began reaping the returns from its strategic drive to build scalable iconic brands.
The buoyant economies in the region have raised standards of living and boosted consumer spending. To capture the opportunities arising from the economic upturn, management and employees set themselves a punishing pace, and rolled out one of the fastest store expansion programmes in the Group’s 48-year history, thereby doubling the total retail footprint across Southeast Asia year-on-year.
Their efforts paid off as sales and net profit after tax reached $257.6 million and $21.5 million, up 38% and 111% respectively over FY 2006. More gratifying is the fact that over a five-year period, we have managed to more than double our sales and grow our core earnings 16 times, even after stripping off exceptional items.
These are satisfying achievements, and particularly so when they came not merely from adding new stores, but also from strong comparable store growth across the Group’s portfolio of diverse brands. There were several important events which took place and created excitement and buzz:
- We successfully launched 14 Gap and Banana Republic stores in Singapore, Malaysia and Indonesia.
- We sold 6B Orange Grove Road, our headquarters in Singapore, in October 2006 for $37.0 million, as part of our strategy of divesting non-core and non-income producing assets. The sale resulted in a net gain of about $5.8 million over book value.
- F J Benjamin was appointed the exclusive CELINE retailer in Singapore, Malaysia, Indonesia and Thailand by French luxury Group LVMH Moët Hennessy Louis Vuitton in March 2007. We look forward to our collaboration with LVMH to continue the expansion of the CELINE legacy in the region.
- We had a successful conversion of our warrants to shares, which brought in a total of $127.7 million in cash as at 16 July 2007, the date of expiry of our warrants. This brings our total shares issued to date to 568.7 million.
- In the last 12 months, we focused on building strong relationships with our shareholders in an effort to improve investor relations, and in so doing, we now have a substantial number of institutional investors.
The rising profitability in recent years has placed the Group in good financial standing. Today, we have a strong balance sheet. Our cash position as at 30 June 2007 stood at $96.1 million, bolstered in part by the conversion of warrants. We have no gearing and the indebtedness on our books are trade-related.
Our investment in St James Power Station will also be significantly enhanced, with the proposed public listing of The St James Pte Ltd through a $108.0 million reverse takeover announced on 17 September 2007.
Given our healthy financial position, the Board is pleased to propose a cash distribution of 13.0 cents a share by way of a $74.0 million capital reduction. This payment will be in addition to our record dividend of 3.5 cents less tax per share for the full financial year.
Going forward, we will continue our growth strategy where we plan to open a net of 47 new stores in FY 2008. We will also continue to grow our timepiece distribution business in North and Southeast Asia, and maintain the leadership position we have with certain brands. We are also on the lookout for acquisitions that will integrate well with and complement our portfolio of brands, thereby enhancing our earnings significantly and contributing positively to shareholder value.
We look forward to the new financial year, confident that barring shocks in our external environment, we are on track for continued progress. Though the full effects of the sub-prime loan crisis in America may not be fully known as yet, and could put a dampening on consumer spending, I am confident that positive consumer sentiment and good economic fundamentals in the region will give us the momentum to excel in the coming year.
Our stellar results would not have been possible if not for the superb support we have received from our principals, our customers, business associates and our shareholders - to them I owe my gratitude. I am also indebted to my fellow Board members for their invaluable insights and counsel, which were crucial guideposts for the Group’s growth. Last but not least, I am grateful to the management and staff of F J Benjamin for their hard work and dedication, which, I am confident, will again steer us through another successful year.
