Dear Valued Shareholders,
On behalf of the Board of Directors, I am pleased to present to you the annual report for Polaris Ltd (the “Company”, and together with its subsidiaries, the “Group”) for the financial year ended 31 December 2020 (“FY2020”).
DEVELOPMENTS IN FY2020
Singapore’s economy has been hit hard by the coronavirus (“COVID-19”) global pandemic. The nation’s Gross Domestic Product (“GDP”) contracted by a record 5.8% in 2020 (versus 0.7% growth in 2019), as the country tackled its worst recession since independence. The retail sector was also not spared, especially during the circuit-breaker period in the second quarter of 2020, when the Singapore government sought to stem the spread of the outbreak.
While these measures were successful, they significantly affected our existing business units and revenue during this period. Our customer-facing operations, which include our Apple Premium Reseller retail outlet and Dyson in-home repair services, were temporarily suspended as a result of the strict safety measures. Our corporate and educational clients also reined in their budgeted expenditures amidst the uncertain outlook.
Notwithstanding these adverse operational challenges, our management team and staff worked tirelessly to overcome these hurdles. We moved swiftly to adapt operations, put more efforts behind online sales and divested two non-core office units to strengthen our financial position. These initiatives positioned us to benefit from the gradual recovery in business sentiment under the new normal environment. The strong team spirit displayed by our employees and close collaboration with our big brand partners enabled the Group to deliver a recovery in the second half of FY2020.
Our consumer electronics sales business benefited from Apple’s launch of several successful new products. The surge in consumer demand for more “screens” at home, for work, study and entertainment, likely played a part as well. We saw interest in smart home products pick up and expanded our portfolio accordingly.
In 2019, we ventured into the pre-owned luxury goods (lifestyle products sales) business to diversify our revenue streams and position the Group for new growth opportunities. The COVID-19 pandemic makes the move timely. The pre-owned luxury goods sector remained resilient, with steady demand growth. Through our investment in Marque Luxury Pte Ltd (“Marque Luxury”), we intend to harness this growth engine and strategically expand our presence in select markets to establish ourselves as a global leader in the pre-owned luxury goods space with a focus on Business to Business (B2B).
Marque Luxury now has operations in Singapore, South Korea, Philippines, Thailand, Japan, the United States, Indonesia and Hong Kong. Marque Luxury America LLC, a subsidiary of the Company which is headed by our joint-venture partner Mr Quentin Philip Caruana, has established re-commerce hubs in Los Angeles, Orange County, Dallas, Atlanta and New York. In addition, Marque Luxury has entered into several partnerships to collaborate with key distributors in Asia and North America. Marque Luxury inked an agreement with the Valuence Group of Japan, to support their sourcing efforts in Asia under the Nanboya brand. In the United States, Marque Luxury established joint ventures with Bentgrass Holdings LLC, a leading distributor to the pawn industry with access to thousands of pawn shops, as well as Luxury HM&C, LLC, whose sales network gives us unique access to US military bases, major cruise ship lines, various department stores and off-price retailers.
The Group posted revenues of S$32.8 million for FY2020 compared to S$54.4 million in the previous financial year ended 31 December 2019 (“FY2019”). All business units declined year on year. The Group recorded a loss attributable to shareholders of S$0.3 million for FY2020, as compared to a profit of S$0.2 million in FY2019. Losses in FY2020 were driven by an overall decrease in business as a result of the COVID-19 pandemic along with the impairment of S$0.3 million of the Group’s 40% stake in Polaristitans Philippines Inc. Net assets decreased from S$14.3 million in FY2019 to S$14.1 million in FY2020.
Shareholders may refer to page 22 of this annual report for certain material developments and corporate actions subsequent to the release of the Company’s preliminary unaudited financial statements for FY2020. These developments enable the Company to divest its non-core businesses and to increase focus on its global pre-owned luxury goods business, Marque Luxury.
CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY
The stringent social distancing measures imposed by the Singapore government to curb the spread of COVID-19 have curtailed our annual community engagement activities. As these restrictions ease with the progressive resumption of social events, we look forward to resuming our volunteering efforts.
The Group will continue to serve and grow alongside our established brand partners, as we envision their strong pipeline of product launches will keep on driving sales for our consumer electronics business. We aim to further strengthen our accessory attachment rate with retail device sales. The Group will continue to develop our corporate segment to enhance our credentials in government tenders and cover both the large corporates and the underserved market for small and medium enterprises.
We believe that our customer service business will also benefit from opportunities to grow, driven by operational excellence and rebounding markets.
Within the field of educational robotics, the market for science, technology, engineering and mathematics (“STEM”) remains promising. We see opportunities to expand our product portfolio and engage new educational institutions.
In the pre-owned luxury goods sector, we remain optimistic that the Marque Luxury business will continue to benefit from the long-term demand for premium lifestyle products. We intend to further allocate resources to support the ambitious growth of this new business segment.
Nevertheless, macroeconomic uncertainty caused by the pandemic remains, and as such, the business environment is expected to remain challenging in 2021. We will continue to exercise financial discipline by optimising operational efficiencies and productivity. Our intention is to continue to find the appropriate balance between our stable growth businesses and selected higher growth opportunities to enhance shareholder value.
WORDS OF APPRECIATION
On behalf of the Board, we would like to welcome Ms. Diana Airin, Ms. Evy Soenarjo, and Mr. Sugiono Wiyono Sugialam who joined us in their respective positions as Independent Non-Executive Director, Non-Independent Non-Executive Director, and Executive Director and Chairman.
Ms. Diana Airin is familiar with the millennial-focused digital activation space, having held senior management positions with corporates in the media and communications sector. Ms. Evy Soenarjo has a wealth of experience in the pre-owned luxury goods market in Indonesia. We are confident that they will be able to contribute positively to the Company’s growth.
Mr. Sugiono Wiyono Sugialam is Polaris’ main shareholder and is returning to the board after serving as a Non-Executive Director from 2011 to 2016. He has a wealth of listed company and entrepreneurial experience across the areas of technology, telecom, lifestyle and retail. Mr. Sugiono is joining with a mission to steer the Company towards sustainability related businesses and we look forward to benefit from his leadership and energy.
We extend our heartfelt appreciations to Mr. Ong Kok Wah for more than a decade of service on the Polaris board. His guidance and steady hand as director and chairman over the years have been invaluable.
This year also warrants a special recognition and appreciation to the people and government of Singapore for their substantial support and dependable conduct in a time of unprecedented challenges.
Finally, we would like to thank our fellow directors for their contributions and counsel. We are also grateful to management and staff for their dedication and cohesive efforts during the year. We extend our warmest appreciation to our shareholders, business partners and customers for their support and confidence in us. Together, we look forward to building a sustainable future for the Group.
Sugiono Wiyono Sugialam
Executive Director and Chairman
Soennerstedt Carl Johan Pontus
Executive Director and Chief Executive Officer