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* Extracted from Annual Report 2017

Dear Shareholders,

On behalf of the Board of Directors of Duty Free International Limited ("DFI" or "Company", and together with its subsidiaries, the “Group”), I am pleased to present to you our annual report and audited financial statements for the financial year ended 28 February 2017 ("FY2017").

The business environment in FY2017 was challenging for DFI, with the slowdown in the economy brought on by low oil prices and subdued global trade. Currency fluctuations against the Malaysian Ringgit, the rise of inflationary cost and weaker consumer purchasing sentiments had an effect on our FY2017 financial performance. Nevertheless, there are some expectations of an improvement in Malaysia's export-led economy this year, with a pickup in global trade and higher fixed investment due to higher oil prices and better-than-expected performance in major economies, particularly the United States, China, Japan and certain European countries. 1

Despite the sluggish pace of the economy in FY2017, DFI's business continued to be stable and profitable. Our turnover in FY2017 of RM632.6 million saw a 4.6% increase from RM604.5 million in FY2016. Earnings before interest, tax, depreciation and amortisation ("EBITDA") of RM104.6 million and profit before tax ("PBT") of RM97.8 million registered a 13.6% and 15.7% growth in FY2017 respectively as compared to FY2016. The increase in profit was largely due to forex gain, an increase in sales volume generated from our outlets alongside an improvement in the pricing of some merchandises.


We achieved yet another milestone in corporate development when our shareholders approved the transfer of our listing from the Catalist to the Mainboard of Singapore Exchange Securities Trading Limited ("SGX-ST") on 30 September 2016, with the commencement of trading on 5 October 2016. DFI's transfer to the SGX-ST Mainboard has given us greater visibility and recognition in the capital markets alongside an increased interest from institutional investors. This move has not only boosted our image within the local and overseas market, but has provided the Company more opportunities for fund raising to support our growth.


Since the completion of the strategic investment in June 2016 of 10% equity plus one share interest by Heinemann Asia Pacific Pte. Ltd. in DFZ Capital Berhad ("DFZ"), Mr Andreas Curt Winnen and Mr Hendrik Korbinian Heyde have been appointed as Chief Executive Officer and Operations Director respectively in DFZ. Mr Winnen and Mr Heyde currently oversee the operations and business development of DFZ, which includes determining the optimal merchandising mix, streamlining procurement operations, and enhancing inventory controls. We are confident that their initiatives together with our existing team's efforts will translate into higher productivity and efficiency for the long term at DFZ.


DFI issued 39 million new ordinary shares and placed out 5.5 million treasury shares at S$0.32 per share in March 2016. In August 2016, DFI issued two placements of 20 million and 30 million new ordinary shares at S$0.365 per share and a further two placements of 18.5 million and 15.65 million new ordinary shares in March 2017 at S$0.38 per share. The total net proceeds raised from the abovementioned share placement exercises amounted to approximately S$43.6 million. As at todate, the Company's number of issued ordinary shares has increased to 1,228,500,393.

These placements have helped to reinforce our capital base and increased the public spread of shares, which in turn improved our level of trading liquidity by encouraging and attracting more investors. While the Company has not utilised any of the net proceeds as at todate, we will make periodic announcements as and when the proceeds are utilised.


To show our appreciation to our shareholders, DFI has paid out a total dividend of approximately S$29.2 million, representing S$0.025 per ordinary share2 for FY2017. In addition, the Company has also announced a bonus warrant of two bonus warrants for every five ordinary shares held, with an exercise price of S$0.43 per share. The issuance of the bonus warrant was to reward shareholders for their continuing support and confidence in the Company, as well as to increase shareholder's equity in DFI, to ensure better participation in DFI's future growth.


Global uncertainties, a volatile Malaysian Ringgit against the US Dollar, weak consumer sentiment on the back of a rising inflationary environment and natural disasters like the flood situation in Thailand will continue to present a challenging business environment but DFI remain poised and ready for a competitive year ahead. Our efforts in enhancing operational efficiency, cost management, intensifying marketing strategies and managing business risks prudently will continue, as well as continuous upgrade and improvement of our retail outlets and product assortments to attract more customers.

Along with recent corporate actions including share placements, the Group's financial standing has also strengthened and put us in a better position to consider opportunities for business expansion as well as other opportunities within the Asian market.


I would like to sincerely thank all our bankers, suppliers, business associates, customers and the various government agencies who have provided valuable support to the Group over the years. I would also like to extend my heartfelt appreciation to the Board of Directors for their leadership and advice, and our employees for their commitment, perseverance and hard work. Working together, we have all contributed to the success and growth of DFI, and I am confident that we will push through tough times ahead and emerge stronger as a company.

In closing, I would like to thank all our shareholders for your endless support and confidence in DFI. We will continue to work hard in building sustainable growth and value to achieve greater heights and long term returns to all our valued stakeholders.

Thank you.

Adam Sani Abdullah
Non–Executive Chairman

1. https://www.mier.org.my/outlook/18 April 2017
2. Based on a total of 1,194,350,393 ordinary shares as at 28 Feb 2017