ANNUAL REPORT 2013/14 CONTENTS 02 12 Corporate Profile Board of Directors 03 16 Corporate Directory Senior Management 04 18 Executive Chairman’s Review Brand Highlights 06 41 Chief Executive Officer’s Report Corporate Governance 08 50 Geographical Presence Financial Contents 09 125 Corporate Structure Statistics of Shareholdings 10 127 Group Five-Year Financial Summary Notice of Annual General Meeting CORPORATE PROFILE With a rich heritage dating back to 1959, SGX-listed F J Benjamin Holdings Ltd is an industry leader in brand building and management, and development of retail and distribution networks for international luxury and lifestyle brands across Asia. Headquartered in Singapore and listed on the Singapore Exchange since November 1996, F J Benjamin has offices in eight cities, manages over 20 iconic brands and operates 226 stores. The Group employs over 3,000 employees and runs three core businesses: LUXURY AND LIFESTYLE TIMEPIECE DISTRIBUTION FASHION RETAILING AND DISTRIBUTION F J Benjamin exclusively distributes timepiece brands – Alpina, F J Benjamin exclusively retails and Bell & Ross, ChronoSwiss, distributes brands such as Banana Frédérique Constant, Gc, Republic, Catherine Deane, Céline, Guess, Julien Coudray, Nautica, Gap, Givenchy, Goyard, Guess, Superdry, Victorinox Swiss Army La Senza, Loewe, Raoul, Sheridan, and Vulcain across Asia. Superdry, Tom Ford, Valextra and VNC across various territories. CREATIVE AND DESIGN Its retail footprint includes Southeast Asia and Hong Kong. It distributes F J Benjamin’s Creative & Design in-house labels Raoul and Catherine division handles the creation and Deane through points-of-sale across production of Raoul designs. China, Europe, the United States and the Middle East. 02 F J BENJAMIN CORPORATE DIRECTORY DIRECTORS SHARE REGISTRAR SOLICITORS Mr Frank Benjamin Boardroom Corporate & Drew & Napier LLC Executive Chairman Advisory Services Pte Ltd 10 Collyer Quay 50 Raffles Place #10-01 Ocean Financial Centre Mr Keith Tay Ah Kee #32-01 Singapore Land Tower Singapore 049315 Non-Executive Deputy Chairman Singapore 048623 Mr Eli Manasseh (Nash) Benjamin PRINCIPAL BANKERS Chief Executive Officer AUDITORS Citibank Berhad Mr Douglas Jackie Benjamin Ernst & Young LLP DBS Bank Ltd Executive Director One Raffles Quay Malayan Banking Berhad North Tower Level 18 Oversea-Chinese Banking Ms Karen Chong Mee Keng Singapore 048583 Corporation Ltd Executive Director Partner: RHB Bank Berhad Mr Vincent Toong Weng Sum Standard Chartered Bank Ms Wong Ai Fong (since financial year The Hongkong and Shanghai Independent Director ended 30 June 2013) Banking Corporation Limited Mr Chew Kwee San Non-Executive Director REGISTERED OFFICE Mr Daniel Ong Jen Yaw 10 Science Park Road Independent Director #04-01 The Alpha Singapore Science Park II Mr Ng Hin Lee Singapore 117684 Independent Director Tel : (65) 6737 0155 Fax : (65) 6732 9616 Email : [email protected] COMPANY SECRETARY Website : www.fjbenjamin.com Ms Karen Chong Mee Keng 03 ANNUAL REPORT 2013/14 EXECUTIVE CHAIRMan’s reVIEW DEAR SHAREHOLDERS We have just come through the worst financial 40% for the first time in five years, from 43% year since 2001 when we suffered the fallout in FY13 to 39%. Overall, the net loss of $22.1 from the 1997/98 Asian financial crisis which million we sustained in FY14 was the biggest ravaged the regional retail landscape. in 13 years. We believe the worst is behind us. Our focus in the new financial year ending Consumer sentiment across our key markets was 30 June 2015 is to return to profitability as generally weak during the year, and it worsened soon as possible so that we can again deliver in the fourth quarter from April to June. News acceptable returns to our shareholders. of the mysterious disappearance of Malaysian Airlines MH370 in March severely hurt retail We believe that Asia will continue to be the spending and tourism in Southeast Asia, which engine driving global growth, even if the heady accounted for 86% of our Group turnover in years of high growth give way to more moderate FY14. Both Malaysia and Singapore sustained and sustainable levels as the region adjusts to the double-digit declines in Chinese tourist arrivals in “new normal” global environment of volatility and the immediate aftermath of the MH370 tragedy. unpredictability. We are also confident that our track record for managing brands will put us in While Chinese tourists in North Asia curtailed good stead when economies in the region snap spending on luxury items following the Chinese out from their sluggishness and Asia’s increasingly government crackdown on gifts and conspicuous affluent customers start to spend again. consumption, shoppers in Southeast Asia pulled back on their purchase of discretionary goods Meanwhile, we have taken steps to mitigate including fashion and timepieces. This led the effects of our external environment. retailers in Singapore especially, to engage We have cleared inventory, closed down in rampant and almost yearlong price cutting or downsized underperforming stores, in their bid to boost sales and clear stocks. and cut costs across the Group. The decrease in sales in North Asia and the We will also stay vigilant in ensuring that our heavy discounting in Southeast Asia resulted brand portfolio mix is always in tune with the in a marked deterioration in our margins. Our changing needs of our customers. In this regard, gross margin, which is a rough gauge of our we are glad that in recent years, we have operating performance and which measures our upscaled our fashion portfolio with the addition net sales less the cost of goods sold, fell below of luxury labels like Tom Ford, Goyard, Valextra, 04 F J BENJAMIN and Givenchy, which are more As we consolidate our retail network The Board has recommended a resistant to price undercutting seen to improve yields, we expect the first and final dividend payout in mass market lifestyle labels. number of stores in Singapore to of 0.25 cent per ordinary shrink to 35 by the end of FY15 from share (tax-exempt one-tier). More recently, our continued strong the current 40. The smaller footprint performance in Indonesia has seen in Singapore, a developed economy Looking ahead, I have confidence us taking another important step with more moderate growth rate and that our disciplined approach to in that populous Asean country. In where retailers suffer from the triple rebalance our brand portfolio and August, we forged an alliance with whammy of falling demand, rising cut costs would help us turn around Saratoga, an Indonesian investment costs and labour shortage, will allow the business and position the Group and business group controlled us to focus on the larger and growing to resume sustainable growth. by Edwin Soeryadjaya and markets of Indonesia and Malaysia. Sandiaga S Uno, which involved We expect the total number of stores Finally, I wish to thank our an investment of 25% in both equity in these two countries to rise to 202 management and staff for their and debt instruments in the Group’s by end FY15 from the current 185. dedication and hard work during Indonesian business. The Group will a trying 12 months. I am grateful realise a net gain of about $11.5 Despite the challenges of market for the support of our landlords, million from the transactions. The conditions and of breaking into bankers, business partners and alliance is a strategic milestone for overseas markets, it is heartening associates. My gratitude also F J Benjamin as Saratoga will assist to note that our Group’s in-house goes to my fellow Board members in the Group’s growth in Indonesia brand, Raoul, has continued to whose wise counsel and guidance with a view to an IPO of the business make headway. We only started have been much appreciated by when market conditions allow. to roll out an international strategy our management team and me. for Raoul about four years ago, For the period under review, some and today, it is already available in of the more significant developments 25 countries, including the fashion in our business included the expiry capitals of London, Paris and New of our exclusive distributorship York. Raoul made its foray into China agreements with Girard-Perregaux in September 2013 with a franchise in North Asia and Southeast Asia agreement under which the franchisee in February 2014, the opening of will open 27 stores by 2017. Last Superdry, Tom Ford and Valextra December, the Group inked another stores in the region, and the franchise deal to expand in the addition of new timepiece labels. Middle East with the leading player in the luxury business, the Chalhoub The Group’s fashion business Group. The latter will open nine witnessed turbulent times, with tourist Raoul standalone stores by 2017. arrivals and spending down, and the rupiah depreciation making During the financial year under shopping more expensive for review, Group turnover slipped 1% Indonesian visitors. Overall, the to $368.2 million. The FY14 net loss Group’s fashion business turnover was $22.1 million compared with a managed a five percent increase. profit of $4.0 million the year before. Operating expenses rose 2% to Our timepiece business in the North $167.0 million due to higher rentals, Asian markets of Hong Kong, China staff costs and depreciation charges. and Taiwan contracted 36% in the Group net gearing rose to 78%. FRANK BENJAMIN fiscal year just passed on top of a Executive Chairman 31% decline in the previous year. F J Benjamin Holdings Ltd 05 ANNUAL REPORT 2013/14 CHIEF EXECUTIVE OFFICer’s REPORT DEAR SHAREHOLDERS, During our financial year Rents in Singapore’s shopping • Operating loss was $12.6 ended 30 June 2014, market districts, already the highest in the million against a profit of forces presented challenges region, have continued to climb $7.5 million previously which caused us to review our as new global brands entering the • Net loss was $22.1 million business priorities.