Chairman's Statement
On behalf of the Board of Directors, I am pleased to present the Annual Report and Audited Financial Statement of Bonia Corporation Berhad and its Group of Companies for the financial year ended 30 June 2011.
FINANCIAL PERFORMANCE
The Group's revenue grew by 28% or RM101.3 million to reach RM461.4 million in the financial year 2011. The growth was mainly attributed to the contribution of revenue of RM54.8 million from Jeco (Pte) Limited, of which the Group completed its acquisition on 20 December 2010, as well as consignment sales in Malaysia which registered a higher revenue growth of RM24.0 million.
For the financial year 2011, the Group recorded a profit before tax of RM56.5 million, an increase of 24%, as compared to RM45.5 million from the preceding year. During the financial year under review, the Group has provided for losses of RM5.4 million arising from its joint venture business in Vietnam. Excluding the losses, the Group would have recorded a profit before tax of RM61.9 million, of which Jeco (Pte) Limited has contributed a profit before tax of RM14.8 million.
ECONOMIC REVIEW
The Malaysian economy showed a moderate growth of 4.0% in the second quarter following a weaker external environment. In the first half of 2011, its GDP expanded by 4.4%. The overall weakness in the advanced economies and the disruptions in the global manufacturing supply chain stemming from the disaster in Japan were reflected in the slowdown in the manufacturing sector. Nevertheless, overall growth continued to be underpinned by the sustained expansion of private domestic demand. This was further supported by the strong exports of commodities and resource-based products given the favourable regional demand and high commodity prices.
Growth in the wholesale and retail trade sub-sector remained resilient and was higher at 7.3% in the second quarter. Private consumption grew by 6.4% in the second quarter, supported by strong consumer spending amid favourable labour market conditions and sustained disposal income. Continued high commodity prices also provided further impetus to spending in the rural areas. Major consumption indicators such as manufacturing sales of food and beverages, credit card spending and imports of consumption goods registered improvements during the quarter. However, real private consumption was affected by higher food and fuel prices, with headline inflation averaging 3.3% in the second quarter. Higher inflation also affected consumer sentiments, as reflected by a slight drop in the MIER Consumer Sentiments Index to 107.9 points in the second quarter. These factors resulted in more cautious spending on discretionary items during the quarter and rest of the year.
OPERATIONAL REVIEW
Retailing
With the successful acquisition of 70% equity in Jeco (Pte) Limited, the Group has added other well known international brands, namely Braun Buffel, Pierre Cardin, Renoma and Bruno Magli to its portfolio of brands. The acquisition has also helped the Group to widen its range of product offerings to cater to the constant changes and demands of the consumers in the fashion retail industry. The acquisition has contributed positively to the Group's earnings since the completion of the acquisition in December 2010.
As one of the leaders in the fashion industry, the Group is constantly upgrading itself in all aspects, from merchandising to store image. This is an important corporate exercise to maintain the Group's brand image as the market leader in the retail industry. One of the exercises was the refurbishment of the BONIA Natural Suria KLCC boutique. Its design features mainly natural concepts, including the use of natural materials for the interior and other environmentally-friendly aspects such as LED energy-saving lights.
During the year under review, the Group has added one (1) BONIA boutique, two (2) Sembonia boutiques, four (4) Carlo Rino boutiques, two (2) Valentino Rudy boutiques and two (2) Braun Buffel boutiques. The Group also opened its first standalone boutique for The Savile Row Co in the Sunway Pyramid shopping mall in May 2011, which features high quality apparels for both men and women, as well as men's shoes, bags and accessories. At present, the Group has a total of seventy-seven (77) standalone boutiques in Malaysia.
Reflecting the ongoing success of BONIA in the global market, the Group recently opened its first BONIA boutique in Jakarta, Indonesia. The 882-square foot boutique is conveniently located in the Grand Indonesia Shopping Town - West Mall in the heart of Jakarta. The boutique showcases and markets a range of ladies' handbags and shoes, men's shoes as well as accessories.
As part of the diversification and natural progression of our product range, the Group has successfully launched its first ever range of 'BONIA Parfums' for men and women during the financial year under review. Inspired by the luxurious and glamorous vibe that the brand exudes, the fragrances, aptly named 'BONIA pour FEMME' and 'BONIA pour HOMME', are distributed exclusively via BONIA boutiques across Malaysia. The perfume range will help the Group to leverage on its ever growing popularity as a luxury brand and further strengthen its BONIA brand as a leading player in the Malaysian fashion industry.
CORPORATE DEVELOPMENTS
On 9 September 2010, the Company entered into a conditional share sale agreement for the proposed acquisition of 70% equity interest in Jeco (Pte) Limited for an aggregate total cash consideration of SGD28.0 million from Liao Tien Fook, Liao Tian Sze, Tan Ah Kiat, Liao Wang Leng and Liao Huanting Joan. The acquisition was completed on 20 December 2010.
Active World Pte Ltd, a wholly-owned subsidiary of Bonia Corporation Berhad, had on 22 November 2010 incorporated a wholly-owned subsidiary in Singapore, known as Active Footwear Pte Ltd. Its current issued and paid-up share capital is SGD1.00 comprising one (1) ordinary share of SGD1.00 each. Its intended principal activities are marketing, retailing and distribution of fashionable footwear.
Active World Pte Ltd, a wholly-owned subsidiary of Bonia, had on 24 June 2011 incorporated a wholly-owned subsidiary known as PT Active World in the Republic of Indonesia. The authorised share capital of PT Active World is Rp13,660,800,000 or equivalent to USD1,600,000, divided into 1,600 shares of Rp8,538,000 each or equivalent to USD1,000 each, of which Rp4,781,280,000 or equivalent to USD560,000, have been fully paid-up. The principal activity of PT Active World is that of investment holding.
On 25 August 2011, the Company acquired the entire equity interest in Vista Assets Sdn Bhd comprising two (2) ordinary shares of RM1.00 each for a total cash consideration of RM2.00 only from Mr Yap Kian Mun and Ms Lim Boon Huay who were also the directors of Vista Assets Sdn Bhd. Vista Assets Sdn Bhd is a dormant company and its authorised share capital is RM100,000, comprising 100,000 ordinary shares of RM1.00 each, of which RM2.00 have been issued and fully paid-up. The intended principal activities of Vista Assets Sdn Bhd are marketing and distribution of fashionable goods and accessories.
On 26 August 2011, the wholly-owned subsidiary of the Company, CRG Incorporated Sdn Bhd incorporated a wholly-owned subsidiary in Malaysia known as CRV Sdn Bhd. The current authorised share capital of CRV Sdn Bhd is RM100,000 comprising 100,000 ordinary shares of RM1.00 each, of which RM2.00 have been issued and fully paid-up. The intended principal activities of CRV Sdn Bhd are marketing and distribution of fashionable goods and accessories.
On 12 September 2011, the Company incorporated a wholly-owned subsidiary in Malaysia known as Paris RCG Sdn Bhd. The current authorised share capital of Paris RCG Sdn Bhd is RM100,000, comprising 100,000 ordinary shares of RM1.00 each, of which two (2) ordinary shares have been issued and fully paid-up. The intended principal activity of Paris RCG Sdn Bhd is management of the food and beverage business.
On 19 September 2011, the Company incorporated a wholly-owned subsidiary in Malaysia known as FR Gallery Sdn Bhd. The current authorised share capital of FR Gallery Sdn Bhd is RM100,000, comprising 100,000 ordinary shares of RM1.00 each, of which two (2) ordinary shares have been issued and fully paid-up. The intended principal activities of FR Gallery Sdn Bhd are retailing, marketing and distribution of fashionable goods and accessories.
Bonia (Shanghai) Commerce Limited, the wholly owned sub-subsidiary of the Company had on 3 September 2011 completed its voluntary deregistration procedures. Bonia (Shanghai) Commerce Limited was incorporated in the People's Republic of China on 23 May 2008 and its principal activities were that of retailing, marketing, promoting, designing, import and export of fashionable goods, apparels and accessories. Bonia (Shanghai) Commerce Limited had ceased operations since June 2010.
On 27 September 2011, a wholly-owned subsidiary of the Company, Banyan Sutera Sdn Bhd, had on 18 August 2011 incorporated a whollyowned subsidiary company known as PT Banyan Cemerlang in the Republic of Indonesia. The authorised share capital of PT Banyan Cemerlang is Rp8,487,000,000 or equivalent to USD1,000,000, divided into 1,000 shares of Rp8,487,000 each or equivalent to USD1,000 each, of which Rp2,121,750,000 or equivalent to USD250,000 have been fully paid-up. The principal activity of PT Banyan Cemerlang is that of wholesaling of fashionable goods and accessories.
FUTURE PROSPECTS
In the first half of 2011, the Malaysian economy grew by 4.4% due to healthy domestic demand and strong exports of commodity and resource-based products amidst slower global economic growth. The global economic outlook was further dampened by the renewed debt crisis in Europe and poor economic data in the USA. However, the Malaysian economy is expected to continue to grow in view of the implementation of the 10th Malaysia Plan and Economic Transformation Programme initiatives.
The Group has been eyeing new business opportunities all this while. An opportunity arose recently when the Group, through its Singapore subsidiary, was successfully appointed as the master Franchisee for "Renoma Café Gallery" from Licensor, Renoma S.T.A.R. for the territories of Malaysia, Singapore and Indonesia. A first concept "Renoma Café Gallery" will be launched in the first half of 2012.
On the overseas front, we have to rebuild our retail base in Vietnam after the fallout with our previous partner for the Vietnam businesses. With the continuing support of Vietnam's departmental store operators and complex management, we foresee this setback to be temporary and we will emerge even stronger after this. We plan to expand our base further in Indonesia after the successful launch of our first exclusive BONIA boutique at the Grand Indonesia Shopping Town in Jakarta. Plans are under way to build up our support and marketing team to explore further opportunities in the boutique retail operations.
Given the Group's business expansion plans locally and abroad, and with tourist expenditure envisaged to increase further, barring any unforeseen circumstances, the Board of Directors is of the view that the Group's performance for the financial year ending 30 June 2012 will remain prudent and will continue to grow, albeit at a slower pace.
DIVIDEND
The Board of Directors has recommended a final dividend of 5% or 2.5 sen per ordinary share of 50.0 sen each, less tax of 25%, amounting to RM3,779,472 in respect of the financial year ended 30 June 2011. Coupled with the interim dividend of 5% or 2.5 sen per ordinary share of 50.0 sen each, less tax of 25%, amounting to RM3,779,472 paid on 23 June 2011, this financial year's total payout shall be 10% or 5.0 sen per share.
The final dividend will be proposed for shareholders' approval in the forthcoming Annual General Meeting. The entitlement date and payment date for the proposed final dividend will be determined and announced at a later date.
ACKNOWLEDGEMENTS
On behalf of the Board, I would like to express my utmost and sincere appreciation and gratitude to the management and staff for their conscientious efforts, commitment and dedication to delivering results. The successes we achieved in the financial year 2011 could not have been possible without their efforts.
We are also grateful to our valued customers, partners, shareholders, business associates, government authorities and financiers for their continued support and confidence in the Group.
CHIANG SANG SEM
Group Executive Chairman
24 October 2011
