Chairman's Statement

On 24 August 2009, the company made the transfer from the Catalist to the SGX Mainboard, marking a significant milestone in the history of Travelite Holdings Ltd.

Dear Shareholders,

The global financial crisis plunged both our key markets, Singapore and Malaysia, into recession in 2008/09 as the economic conditions deteriorated quickly. Being tradedependent, Singapore experienced a sharp year-on-year contraction of 9.4% in Q1 2009, underlining the severity of this crisis with much lower global demand. Despite a recovery in the later part of the year, the Singapore economy contracted by 2.0% and Malaysia by 1.7% in 2009.

Financial Highlights

Business conditions for 1H FY2010 were particularly tough for the Group where our revenue dropped by $5.2 million to $30.5 million. This is reflective of the overall performance of the wholesale and retail sector in Singapore which contracted year-on-year by 13.9% in Q2 2009 and 8.9% in Q3 2009.

We saw a healthy recovery in our business in 2H FY2010 which was comparable to that of 2H FY2009 but were unable to claw back the losses made in 1H FY2010. For the financial year ended 31 March 2010, the Group registered a total revenue of $69.0 million, a drop of 4.3% or $3.1 million from $72.1 million recorded for the financial year ended 31 March 2009.

Despite more promotions and clearance activities being held by the Group during FY2010, our gross profit margin remained fairly consistent at 44% as compared to FY2009. The overall decrease of gross profit by $1.2 million was due to a drop in turnover of $3.1 million.

Fashion Street (S) Pte Ltd ("FS"), which markets ladies fashion mainly through specialty stores, was hit particularly hard in FY2010. It reported a 42.2% drop in revenue to $6.5 million. Accordingly, its gross profit had eroded from $5.6 million in FY2009 to $2.9 million in FY2010.

Given the present slowdown in its retail sales, FS has made an allowance for impairment on its inventories of $0.5 million, and had also written off its plant and equipment of $0.2 million. Coupled with a high fixed rental cost of $2.6 million, FS reported a loss of $3.3 million in FY2010.

The Group has thus fully impaired its goodwill and other intangible assets of $1.0 million arising from the acquisition of FS.

As a result, for the financial year ended 31 March 2010, the Group incurred a loss before tax of $2.5 million, the first time in the Group's history to report a loss. Excluding the impairment of goodwill, other intangible assets, plant and equipment and inventory which have been provided for in FY2010, the Group's loss before tax would be $0.7 million.

Operational Review

In March 2010, we opened 2 specialty stores for Ashworth and Delsey labels, respectively, at PARCO Millenia and closed down the U.R.S & inc. boutique at The Heeren due to poor sales.

Since September 2009, the Group acquired the exclusive distribution rights to market Delsey, Fornarina and Travel Blue in Singapore and Malaysia. We are also in discussion with a number of brand principals to represent their brands in this region.

In addition, the Group has appointed distributors for the Cambodia and Vietnam markets in FY2010 to further expand our presence abroad.

Looking Ahead

The Management is of the view that the retail industry will continue its recovery in FY2011. Nevertheless, we will continue to monitor and review the performance of our business and take appropriate measures to manage costs.

Appreciation

On 24 August 2009, the Company made the transfer from the Catalist to the SGX Mainboard, marking a significant milestone in the history of Travelite Holdings Ltd. This could not have been achieved without the companies and individuals who have supported us along the journey.

Many employees have been with us, through good and bad times, and contributing significantly over the years. In appreciation, the Group awarded 450,000 ordinary shares to selected employees under the Group's Performance Share Plan in FY2010.

On behalf of my fellow Directors, I would like to thank all our shareholders, customers, business associates, staff and management for their continued support.

 

Thang Teck Jong
Executive Chairman