Dear Valued Shareholders,
On behalf of the Board of Directors, I am pleased to report that Polaris Ltd (the “Company”, and together with its subsidiaries, the “Group”) achieved a profit of S$0.2 million for the financial year ended 31 December 2019 (“FY2019”) – a resilient performance despite the challenging macroeconomic environment.
DEVELOPMENTS IN FY2019
The Singapore economy grew by 0.7% in 2019 (as compared to 3.1% in 2018), the slowest in a decade amid prolonged global trade conflicts and tepid business sentiment. Nevertheless, the Group’s new management team continued to forge ahead by streamlining business operations and expanding each division’s suite of product and service offerings.Our distribution division delivered strong growth by working closely with our business partners to secure more contracts and a larger share of their procurements.Our retail consumer electronics division also saw growth with a more comprehensive product and service offering for our customers. Our participation in the Apple Device Enrollment Program (“DEP”) facilitates easier deployment and configuration of devices and this allows us to better serve our corporate clients. While the retail sector remains challenging, the division managed to bolster its performance through higher accessory attachment rates coupled by stronger device sales. Our educational robotics portfolio and customer base strengthened, positioning us well in the rapidly evolving and expanding educational sector.In addition, our customer service teams rose to the challenge to substantially expand our capacity and sharpen service quality standards. Both the qualitative and quantitative results were impressive. We are proud of our achievements to deliver premium service at scale.
Notwithstanding the current operating environment, we remain committed to pursue new business opportunities to drive sustainable growth and enhance shareholder value. After reviewing several business opportunities over the two past years, we proceeded to enter the resale space and established a joint venture in Singapore, Marque Luxury Asia Pte Ltd, in the fourth quarter of 2019. The business is focused on developing the wholesale and retail of premium lifestyle products.On the regional front, Polaristitans Philippines Inc. remained stable and continued to focus on sound account and fiscal management, accurate product forecasting and tight inventory management. The team continues to pursue opportunities with key reliable resellers and corporate accounts.
The Group posted revenue of S$54.4 million for the financial year ended 31 December 2019 (“FY2019”) compared to S$23.1 million in the previous financial year ended 31 December 2018 (“FY2018”). All business units posted growth year on year. The Group recorded profit attributable to shareholders of S$0.2 million for FY2019, on par with the profit of S$0.2 million in FY2018. The result in FY2018 was supported by the gain on disposal of Polaris Telecom Pte Ltd. Profitability in FY2019 was achieved from improved business performance and a reduction in operating costs. Net assets decreased significantly from S$60.5 million in FY2018 to S$14.3 million in FY2019. This was mainly due to the impairment of the Group’s 8.22% stake in PT Trikomsel Oke Tbk, as the shares were suspended from trading on the Indonesia Stock Exchange in FY2019.
CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY
Polaris continues to actively contribute and support the communities in which we live and work. This year, our employees were pleased to continue our commitment to serve by volunteering at the Willing Hearts soup kitchen in October 2019.Apart from a handful of staff, Willing Hearts is wholly run by volunteers. It operates a soup kitchen that prepares, cooks and distributes about 5,000 daily meals to over 40 locations island wide throughout the year. Beneficiaries include the elderly, the disabled, low income families, children from single parent families or otherwise poverty-stricken families, and migrant workers in Singapore.We are grateful to do our part to serve and contribute to our society so as to improve the lives of others.Embracing sustainability is integral to the long-term development and growth of our business. For more information on our sustainability efforts, performance and strategies in FY2019, please refer to the Sustainability Report on pages 10 to 20.
Our retail and customer service businesses continue to see both opportunities and risks. We work closely with several leading brands which are performing well and Polaris is in a position to benefit from their growth. At the same time, these companies continually review the strategies and terms with which they engage their partners, which may affect our businesses both positively and negatively over time. We will continue to invest in our people and these businesses to ensure that we remain as a valuable and preferred partner. As in 2019, we will explore adding new higher margin products and services to our business portfolio. With our position in educational robotics established and Singapore’s growing private and public investments in the disciplines of science, technology, engineering and mathematics (“STEM”), we hope that our portfolio will expand to address growing customer demand.Having entered the resale space in late 2019, we are in the early stages of establishing this business and developing the opportunities we see here. These include expanding our sourcing footprint and investing in our own technology platforms to ensure that we optimally leverage on the valuable data that we are collecting.Going into 2020, the Group is well positioned to manage our existing businesses as well as explore new ones. The work ahead is focused on taking on a manageable level of risk that allows us to drive sustainable growth and enhance shareholder value.
WORDS OF APPRECIATION
We would like to start by appreciating our valued employees for going the extra mile in 2019. Without their extensive efforts, our improved performance would never have been possible. To Mr Ong Soon Hwee, Gary, who stepped down as Executive Director and Chief Operating Officer, we offer our heartfelt thanks for his many contributions to the Company. To all of our shareholders, customers and business partners we extend our warm appreciation for your continued support. Finally, we would like to thank our management team and fellow board members for their dedication and guidance. We look forward to make 2020 another successful year together.
Ong Kok Wah
Independent Non-Executive Chairman
Soennerstedt Carl Johan Pontus
Executive Director and Chief Executive Officer