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CORPORATE PROFILE Established in 1987 and listed on the Mainboard of the The Group has recently ventured into the lifestyle Singapore Exchange Securities Trading Limited (the retail concept business where its department store “SGX-ST”) on 3 November 2011, Parkson Retail Asia operations are complemented with food courts, Limited (“Parkson” or the “Company”, and together bakeries, gourmet supermarkets and children with its subsidiaries, the “Group”) is a leading and playground. The Group has also introduced private award-winning Southeast Asian department store label brands, as well as agency apparel lines of retailer. With an esteemed 30-year track record within numerous international brands which are exclusive to the retail industry, Parkson currently extends over 70 Parkson. department stores across cities in Malaysia, Vietnam, Indonesia and Myanmar. As it seeks to continuously refresh and enhance its offering, Parkson consistently strives to cater to the Parkson offers its consumers a wide range of varying needs and preferences of its customers and to merchandise from fashion apparel to household deliver value for its shareholders. goods. The Group operates an efficient and competitive business model through a blend of concessionaire sales model, anchor tenant, customised product mix and state-of-the-art management tools. CONTENTS CORPORATE PROFILE 10 CSR PROGRAMME KEY MILESTONES 12 BOARD OF DIRECTORS 01 GEOGRAPHIC FOOTPRINT 15 KEY MANAGEMENT 02 CHAIRMAN’S STATEMENT 17 CORPORATE INFORMATION 04 FINANCIAL HIGHLIGHTS 18 FINANCIAL CONTENTS 06 MANAGEMENT DISCUSSION AND ANALYSIS ANNUAL REPORT 2017 of Growth and Excellence 1987 2007 2013 2016 2017 Opened first Parkson store in Opened Parkson Pavilion, our Entered Myanmar with our first • Launched LOL-branded retail • Launched private label, 7Dayz Malaysia at Sungei Wang Plaza, flagship store in Malaysia, where store at FMI Centre, Yangon chain in Malaysia. in Kuala Lumpur, Malaysia. Kuala Lumpur. we are one of the anchor tenants. (relocated to Junction Square, LOL is a value fashion retailer • Launched food court initiative, Yangon in March 2017). specialising in affordable Makan Makan, in Kuala quality apparel. Lumpur, Malaysia. 2005 • Introduced Korean concept • Introduced bakery line, Hogan stores i.e. SPAO, MIXXO, Bakery with three outlets in Entered Vietnam through a store WHO.A.U. and SHOOPEN in Kuala Lumpur, Malaysia. at Saigon Tourist Plaza, Ho Chi Kuala Lumpur, Malaysia. Minh City. • Launched first FoodPark supermarket in Kuala “The past 30 years are a Lumpur, Malaysia. testament to our strength and our presence within the industry in the areas where we operate. It goes without saying 2014 that this milestone would not have been Launched Parkson-branded achieved if not for the stores in the cities of Medan and 2011 Jakarta, Indonesia. passion and hard work of our management • Entered Indonesia through and employees, and acquisition of Centro the support of our loyal department store network. • Listed on the Mainboard of the customers, suppliers and SGX-ST. shareholders.” Tan Sri Cheng Heng Jem Executive Chairman GEOGRAPHIC FOOTPRINT MALAYSIA Number of stores: 45 GFA (leased): 527,000 sqm VIETNAM Number of stores: 7 GFA (leased): 67,000 sqm GFA (owned): 23,000 sqm GFA (managed): 38,000 sqm INDONESIA Number of stores: 17 GFA (leased): 148,500 sqm GFA (owned): 1,500 sqm MYANMAR Number of store: 1 GFA (leased): 4,000 sqm ANNUAL REPORT 2017 PARKSON RETAIL ASIA LIMITED 1 CHAIRMAN’S STATEMENT IT GOES WITHOUT SAYING THAT THIS MILESTONE WOULD NOT HAVE BEEN ACHIEVED IF NOT FOR THE PASSION AND HARD WORK OF OUR MANAGEMENT AND EMPLOYEES, AND THE SUPPORT OF OUR LOYAL CUSTOMERS, SUPPLIERS AND SHAREHOLDERS. Dear Shareholders, Parkson turns 30 this year, and I am filled with pride For the financial year ended 30 June 2017 (“FY2017”), and honour to witness this historic milestone. the Group recorded Gross Sales Proceeds of S$982.4 million, revenue of S$412.7 million and a net loss of From humble beginnings in 1987, we have since grown S$61.2 million. The retail industry continues to face to become a leading and award-winning department many challenges, and this is evident in the markets store retailer in the Southeast Asia region with 70 stores where we operate. spanning 809,000 sqm of gross floor area (“GFA”). Performance for the Malaysia operations in FY2017 had The past 30 years are a testament to our strength and been impacted by the subdued consumer sentiment. our presence within the industry in the areas where The Malaysian Institute of Economic Research reported we operate. It has not been an easy feat through that the country’s consumer sentiment index continues the decades, being at the center of ever-changing to register below the 100-point confidence threshold retail landscapes and consumer preferences. It goes throughout all four quarters in FY2017. without saying that this milestone would not have been achieved if not for the passion and hard work of our Moving on to Vietnam, the retail scene is still very management and employees, and the support of our saturated and operations have proven to be difficult in loyal customers, suppliers and shareholders. the current discretionary retail environment. 2 PARKSON RETAIL ASIA LIMITED ANNUAL REPORT 2017 In Indonesia, performance in FY2017 had been accessories choices under one roof, in all the markets dampened by uncertainties arising from increased we operate. political and religious tensions. I would like to take this opportunity to express my There were changes to our Myanmar operations in gratitude and appreciation to Mr. Wee Kheng Jin, the FY2017. A new store at Junction Square, Yangon had Lead Independent Director, who has decided not to commenced operations in March 2017, in replacement seek for re-election at the forthcoming Annual General of our first store at FMI Centre, Yangon which was Meeting (“AGM”). On behalf of the Board, I would like closed in January 2017 due to redevelopment of the to thank Mr. Wee for his invaluable contribution over premises by the landlord. the years. Taking cognizance of these challenges, the Group At the same time, I welcome the appointment of both undertook a comprehensive review during the financial Mr. Michael Chai Woon Chew and Mr. Ng Tiak Soon as year to assess the viability of underperforming stores Independent Directors of the Company. Both Mr. Chai and ventures. As a result of this review, the Group and Mr. Ng bring with them decades of experience in recorded net impairment charges on the property, the legal and accounting fields, respectively. plant and equipment of its underperforming stores and ventures of S$21.4 million, and an impairment charge We are also excited to announce the appointment of on intangible assets of S$4.7 million. The Group closed our Chief Executive Officer, Mr. Larry Michael Remsen. a total of four stores in FY2017. An industry veteran, Mr. Remsen brings with him over four decades of experience in the retail industry. Mr. Nevertheless, proceeding with considerable vigilance, Remsen was previously the Chief Executive Officer and we continue to make progress both in expanding our Vice President Director of PT Matahari Department geographical presence and in driving our lifestyle Store Tbk. With Mr. Remsen’s strong expertise and retail concept business model. track record, we are confident that we would be able to circumnavigate the challenges within the industry and The Group added five new stores to its regional network strategically execute our business plans. during the financial year. We have also introduced an exclusive bakery line, Hogan Bakery, into Kuala Lumpur, Finally, on behalf of the Board, I wish to express my Malaysia. Hogan Bakery is a popular bakery chain in sincere gratitude to our management, employees, Taiwan which offers unique bread and pastries. customers, shareholders, suppliers, business associates and all stakeholders for your unwavering At the same time, we launched our very first food court support. Your confidence in the Group has allowed us initiative, Makan Makan, within two of our department to reach this milestone today, and we look forward to stores in Kuala Lumpur, Malaysia. Food courts are a continuing our journey together for the next 30 years staple in almost every shopping mall, and shoppers and beyond. would no doubt welcome this affordable food and beverage option. Tan Sri Cheng Heng Jem On bolstering our agency lines and private labels, Executive Chairman we have launched additional agency lines from international brands such as Sfera and MDS, and an exclusive private label, 7Dayz, in Malaysia. Moving forward, we hope to be able to further enhance our agency lines and private labels portfolio, to offer our consumers a variety of cutting-edge fashion and ANNUAL REPORT 2017 PARKSON RETAIL ASIA LIMITED 3 FINANCIAL HIGHLIGHTS 2013 2014 2015 2016 2017 SGD'000 SGD'000 SGD'000 SGD'000 SGD'000 Consolidated Income Statement Gross sales proceeds (1) 1,109,387 1,077,891 1,077,567 967,746 982,422 Revenue 446,728 432,037 428,751 388,417 412,734 Earnings before interest, tax, depreciation 65,857 59,691 (25,869) 53,537 (21,437) and amortisation Profit/(Loss) for the year 37,020 32,058 (52,795) 28,595 (61,234) Profit/(Loss) attributable to owners of the 38,577 34,382 (34,688) 30,177 (58,218) Company Basic and diluted earnings per share (cents) 5.70 5.08 (5.12) 4.46 (8.64) Consolidated Balance Sheet Total assets 438,134 419,866 374,407 374,077 340,315 Total liabilities 185,110 185,814 244,361 216,751 250,015 Total equity 253,024 234,052 130,046 157,326 90,300 Notes: 1. Gross sales proceeds represent the sum of sales proceeds from direct sales and concessionaire sales, consultancy and management service fees, rental and other income.