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* Extracted from Annual Report 2021

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 present you our annual report for the financial year ended 28 February 2021 (“FY2021”).

ECONOMIC AND BUSINESS OVERVIEW

COVID-19 pandemic has disrupted many lives and caused major economic upheavals all over the world. Travels came to a standstill as international borders were shut and movement restrictions imposed due to the outbreak of the COVID-19 pandemic, which had adversely impacted the global economic activities. The Group’s businesses had also been greatly affected by this unprecedented event as a result of lockdowns, international border closures and other control measures imposed by the governments worldwide to curb the spread of the COVID-19. The Group had swiftly implemented tough but necessary measures which included closing down non-performing outlets, suspending non-essential capital expenditures and carrying out cost containment exercises to mitigate the pandemic’s impact on the Group’s business and ensuring the safety and well-being of the Group’s employees.

FINANCIAL PERFORMANCE

For FY2021, the Group recorded a revenue of RM223.4 million, a decrease of 63.8% as compared to the financial year ended 29 February 2020 (“FY2020”) mainly due to the closure of the Group’s retail outlets in Malaysia since 18 March 2020 following the imposition of the nationwide Movement Control Order (“MCO”) and Conditional Movement Control Order (“CMCO”) by the Malaysian Government to curb the outbreak of COVID-19 pandemic. While certain outlets in the Group were operating, they had to ensure strict compliance with Standard Operating Procedures (“SOPs”), and experienced an overall decline in sales due to subdued consumer demand. As a result of the detrimental impact brought about by the COVID-19 pandemic outbreak, the Group reported a loss attributable to owners of RM41.8 million for FY2021, as compared to a net profit of RM10.9 million a year ago. Other than the drop in revenue, the loss recorded by the Group was also due to non-cash items such as impairment of goodwill of RM11.5 million and inventories written down of RM2.6 million. 

While the severity and uncertainty of COVID-19 outbreak has adversely affected the Group’s financial performance for FY2021, the Group continues to maintain a strong and robust balance sheet. The Group’s net assets position of RM381.9 million and cash and bank balances of RM195.0 million as at 28 February 2021, would allow the Group to manage the current challenges and at the same time continue to pursue business opportunities that will bring greater value to our shareholders.

OUTLOOK AND STRATEGY

Market conditions are expected to remain challenging in the near term with demands for travel remaining largely subdued due to the ongoing uncertainty about the pandemic and the global movement restrictions. While there were some pickup in domestic travel demand in the second half of 2020, the recovery was set back by fresh waves of infections and the emergence of new variants of the coronavirus. The World Tourism Organization (UNWTO) expects a small rebound in international travel arrivals by the second half of 2021, and a full recovery to 2019 levels to take 2.5 to 4 years1. Encouraging news on vaccines have boosted hopes for recovery but challenges remain, with the travel sector expected to remain in survival mode well into 2022. The Group believes that the sector recovery will be slow, however, advancements in vaccine deployment, development and its gradual roll-out will help to uplift consumer and business confidence albeit protracted, will eventually spur the demand for international travels.

As the Group awaits the resumption of travel activities and re-opening of international borders, the Group will continue to adopt a disciplined approach on cost and prioritise cost containment measures. The Group will continue to strategise, adapt and navigate through the challenging business environment and endeavor to take timely appropriate actions in order to minimise operating risks and maximise its resources.

ACKNOWLEDGMENTS

On behalf of the Board of Directors, I would like to convey my sincere appreciation to all our shareholders, bankers, suppliers, business partners, customers and the various government agencies for your solid and valuable support, advice and guidance to the Group. I also wish to extend our sincere gratitude to our dedicated team of management and employees who had worked together as one family which has enabled the Group to ride through this difficult year. Further, I would like to express my appreciation to Mr Ong Bok Siong who will step down as DFI’s Managing Director and retires on 30 June 2021 for his invaluable service and contributions during his tenure with the Group.

Last but not least, I would also like to thank my fellow Board members for your dedication, invaluable advice and guidance throughout the year in ensuring the successful execution of the Group’s strategies in overcoming the challenges in this tough operating environment.

Thank You.

Adam Sani Abdullah
Non-Executive Chairman