Chairman’s Message

Chairman_s Message photo
DEAR SHAREHOLDERS

The financial year ended 31 March 2018 (“FY2018”) proved to be a banner year for Cortina Holdings Limited (“the Group”). As we commemorated our 45th year of operations, the Group turned in a record performance on the back of improved stock management, enhanced performance in key markets and higher tourist arrivals.

Globally, economic growth showed signs of picking up during the year, although uncertainties remained on the international trade and geopolitical fronts. The year in review saw the Singapore economy grew 3.6%, in line with the modest improvement in the global economic climate. Among the markets where we have an operational presence, Singapore and Malaysia emerged as our top performers, while Thailand, Taiwan and Hong Kong generated results in line with expectations.

GROWING FROM STRENGTH TO STRENGTH

Capitalising on strong business fundamentals and operational excellence, the Group maintained a growth trajectory to deliver a strong performance. In FY2018, total revenue reached a new high of S$466.3 million,representing a 19.3% increase compared to S$390.8 million in the previous financial year. Driving this expansion were new store openings and higher tourist arrivals from China.

In tandem with the rise in revenue, net profit recorded an uptick of 85.3%, climbing to a record S$23.1 million during the year in review, from S$12.5 million the year before. This was also attributable to good sales mix and improved sales margins, which rose to 23.2% in FY2018 compared to 22.9% in the last financial year. Contributing to the increase in sales margin was the price resilience of our products alongside sustained demand for luxury watches that was attributed to improved market conditions.

On the back of our robust revenue and profit growth, the Group generated net operating cash inflow of S$55.4 million in FY2018. Meanwhile, net asset per share rose to 107.7 cents, up from 96.3 cents in FY2017, and earnings per share recorded an increase to 13.5 cents compared to 7.1 cents in the last financial year.
GROWING OUR PRESENCE

In driving sustainable growth, the Group adopts a prudent approach to augment performance and ensure value creation. As part of our continuing efforts to enhance customer experience, we broadened our presence in Thailand and Malaysia during the financial year with the opening of two new stores strategically located within Bangkok and Kuala Lumpur respectively.

The Bangkok store is a multi-brand boutique at a luxury shopping destination. Featuring a unique shop-in-shop concept that enables international luxury brands to retain their distinctive brand identity, the new store offers an extensive selection of exquisite timepieces. Set amidst a lavish, nature-inspired environment, the boutique has drawn positive responses from customers and watch aficionados alike, with the mall’s prime location attracting high foot traffic.

ENHANCING CUSTOMER EXPERIENCE

The Group regularly reviews the performance of our retail outlets to optimise same-store sales. Aside from expanding or relocating existing boutiques, we will continue to refurbish our stores in our quest to raise the bar in customer satisfaction. During the year in review, we commenced the refurbishment of our boutique at Raffles City Shopping Centre in Singapore. Aimed at heightening customer experience and enhancing our brand, the store renovation is expected to be completed by early FY2019.

In addition, we relocated our boutique in Wisma Atria, Singapore to Mandarin Gallery in FY2018, enabling us to leverage the strategic location of this luxury mall at the heart of Singapore’s shopping belt. The financial year witnessed the relocation and expansion of our first and only Patek Philippe boutique in Malaysia. Also located within Suria KLCC shopping mall in Kuala Lumpur, the larger unit comes with elegant architecture and furnishings that reflect the rich heritage of the brand and features the tallest Patek Philippe Façade in Southeast Asia. At the same time, our Rolex boutique at Marina Square in Singapore which opened in FY2017 has continued to deliver steady growth.

More than just building our brand equity, we strive to foster long-lasting relationships with our customers. To this end, we hosted a series of marketing events designed not only to delight our customers, but also to foster brand loyalty.

In embracing digital connectivity, plans are underway to roll out an e-commerce platform on our website in the first half of FY2019. Featuring selected brands and models, this platform will bring our luxury timepieces to a wider consumer base.

COMMUNITY ENGAGEMENT

As a responsible corporate citizen, we remain committed to enhancing the lives of the communities we operate in. Signalling our dedication to social sustainability, our 45th Anniversary Gala Dinner saw the Group donating S$500,000 to schools and hospitals and charitable organisations across Singapore.

LOOKING AHEAD

On the macro economic front, the outlook for 2018 is turning more cautiously optimistic. The International Monetary Fund (IMF) and the World Bank have upgraded their global growth forecasts, anticipating stronger than expected expansion on the back of improving sentiments in markets across Europe, Asia and the US. However, the prospect of interest rate adjustments could affect the momentum of economic growth. Should the economic outlook improve, the economy would likely provide an uplift to consumer sentiment, which bodes well for the luxury watch industry.

Moving forward, we remain committed to strategies that foster sustainable growth and create value over the long term. Through adopting an approach that focuses on driving organic growth, alongside prudent capital management measures, we continue to explore new opportunities to expand our regional network.

APPRECIATION

The Group’s sterling performance stemmed from the contributions of many stakeholders. I would like to thank the Board of Directors for their wise counsel and advice in guiding the Group through another successful year. Our thanks also goes to our partners and customers for their continued support, as well as our management and staff for their hard work, dedication and passion, which represents the Cortina brand. I also convey my sincere appreciation to our shareholders for their continued commitment, loyalty and confidence.

I am pleased to inform that the Board of Directors has proposed a final and special tax-exempt cash dividend of 2.0 cents and 2.5 cents per ordinary share for financial year 2018, subject to the approval of shareholders at the next annual general meeting to be held on 26 July 2018. This represents an 50% increase over FY2017. Having marked our 45th anniversary with a record performance, we remain committed to building on our achievements and generating shareholder value for the long term.

LIM KEEN BAN, ANTHONY

Chairman & CEO