Presentation - Duty Free International Limited

DUTY FREE INTERNATIONAL LIMITED
Corporate
Presentation
May 2011
1
Contents
1. Business
Overview
3. Financial
Highlights
2. Key
Strengths
4. Outlook
and Strategies
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DUTY FREE INTERNATIONAL LIMITED
Business
Overview
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About DFI
One of the largest duty-free trading groups in Peninsular Malaysia
backed by 28 years of operating track record
CORE BUSINESS
 Trading of duty-free
merchandise
– 36 “Zon” outlets
 Provision of hospitality
services
– Shopping mall, hotel
and restaurants
– International ferry
terminal
– golf course
FY11 Segment Revenue:
RM573.3m
Duty Free:
RM521.5m;
91%
SHAREHOLDING STRUCTURE
 Completed RTO of Esmart
Holdings in 2011
Hospitality
 Majority owned subsidiary of
Services:
Bursa-listed Atlan Holdings Bhd
RM51.9m; 9%
 Listed on SGX Catalist today
PRIMARY MARKET
 Peninsular Malaysia
 Strong presence in all
leading entry and exit
points
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Reverse Take Over of Esmart Holdings
RTO Salient Highlights
 Acquired 100% Darul Metro Sdn Bhd (DMSB) and a controlling 74.71% stake in DFZ Capital Berhad
(DFZ)
 Aggregate consideration of S$285 million satisfied by the allotment and issuance of 905,082,113
consolidated shares and 90,502,811 consolidated warrants
 RTO completed on 7 January 2011
 Subsequently acquired 100% stake in DFZ via a Mandatory General Offer
 Disposed ailing electronics business on 1 February 2011; Change in business to that of DFZ and
DMSB
 DFZ officially delisted from Bursa on 17 March 2011
 Name change to Duty Free International Limited on 24 May 2011
 Total number of issued shares as at 28 February 2011: 1,114,124,160
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Shareholding Structure
Atlan Holdings Bhd (AHB)
81.15%1
Duty Free International Limited (DFI)
100%
DFZ Capital Berhad (DFZ)
Darul Metro Sdn Bhd (DMSB)
Subsidiaries
• About AHB: An investment holding company listed on Bursa Malaysia. Subsidiaries are involved
in a wide range of businesses including duty-free trading and retailing, property development
and investment, hospitality as well as manufacturing of automotive component parts.
• About DFZ: Principally engaged in the duty-free business and hospitality services
• About DMSB: Owns one of the largest duty-fee zone property in Southern Malaysia, the Zon
Johor Bahru
1 As at 14 March 2011
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Our Business Model
Duty Free
Business
Hospitality
Business
 Retailing of duty-free goods
 36 duty-free outlets operated under the “Zon” brand
 Operation and management of “The Zon Johor Bahru”, the largest duty free zone
in Southern Malaysia
– The Zon Regency Hotel by the Sea
– The Zon Mall
– The Zon International Ferry Terminal
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What is a Free Zone?

A Free Zone is
– An area declared by the Minister of Finance under the provision of Section 3(1) of
the Free Zones Act 1990
– Mainly designed to enable commercial activities and manufacture of goods meant
for export to be carried out with minimal customs documentation and formalities
– Deemed as a place located outside Malaysia
– Goods of any description may be brought into a Free Zone for retail trade or
otherwise without payment of customs duty, excise duty or sales tax

A duty-free sales outlet has to be either operating within a Free Zone prescribed under
the Free Zone Act, 1990 or be issued with a duty-free shop licence under Section 65D
of the Customs Act, 1967
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Main Products and Major Brands We Carry
Our Main Products are those which…
• command stronger brand loyalty thus
demand for them is more inelastic
• attract substantial government duties
Incentive to buy due to substantial
differences between duty-free and
duty-paid prices
Wines & Spirits
Tobacco Goods
Perfumes & Cosmetics
Chocolates
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Johnnie Walker
Martell
Chivas Regal
Penfold
Hennessy
Benedictine DOM
Jack Daniel’s
Dewars
Glenmorangie
Bacardi
Tiger Beer
Carlsberg
Guinness
Heineken
Royal Stout
Budweiser
Dunhill
Marlboro
Mild 7
Salem
Kent
Benson & Hedges
Gudang Garam
Anna Sui
Burberry
Bvlgari
Cacharel
Calvin Klein
Dunhill
Gianni Versace
Giorgio Armani
Givenchy
Guess
Hugo Boss
Issey Miyake
Lancome
Ralph Lauren
Loreal
Revlon
Shiseido
Ferrero Rocher
Nestle
Hersheys
Toblerone
Cadbury
Danson
Beryls
M&M
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Market Presence
36 Strategically Located Outlets in Malaysia
PADANG BESAR
Duty Free Shopping
1 Retail outlet
BUKIT KAYU HITAM
Duty Free Shopping
4 Retail outlets
Recreational Activities
LANGKAWI
Duty Free Shopping
3 Retail outlets
1 Wholesale outlet
RANTAU PANJANG
Duty Free Shopping
1 Retail outlet
PENANG
Duty Free Shopping
1 Retail outlet
3 Wholesale outlets
PENGKALAN HULU
Duty Free Shopping
1 Retail outlet
KUALA LUMPUR
Duty Free Shopping
2 Retail outlets
1 Wholesale outlet
MELAKA
Duty Free Shopping
4 Retail outlets
Retail outlets: 31
Wholesale outlets: 5
Total outlets: 36
TIOMAN
Duty Free Shopping
2 Retail outlets
JOHOR BAHRU
Duty Free Shopping
12 Retail outlets
Accommodation
Department Store
International Ferry Terminal
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Duty Free Zone Outlets
Bukit Kayu Hitam, Kedah
The Zon Duty Free Outlet
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Strategically located at north-eastern Malaysia (Kedah)-Thailand border
4 retail outlets
GBA of 5,305 sqm
Approx. 770 acres of duty-free vacant land yet to be capitalised and developed
GBA: Approximate Gross Built-up Area
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Duty Free Zone
The Zon Johor Bahru
• A full-fledged, all-in-one
leisure destination with
comprehensive facilities:
– Hotel
– MICE facilities
– Shopping
– Dining
– Entertainment
– Recreation
– Sea travel
• Unique status as the
exclusive downtown
duty-free area in JB
Type of facility
Shopping mall (5 floors)
Hotel (12 floors)
International ferry terminal
Fun Zon
Customs and Immigration
Floating restaurant
Multi-storey carpark
Total GFA
Gross Floor Area (million sq ft)
0.6
0.6
0.1
0.3
1.6
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The Zon Johor Bahru
The Zon Regency Hotel by the Sea
Duty Free Gallery
The Zon International Ferry Terminal
5-star rated 400-room business class hotel
with M.I.C.E. facilities
Only downtown duty-free centre in Southern
Malaysia with extensive range of products
Official entry point in Southern Malaysia with
Customs, Immigration & Quarantine facilities
The Zon Mall
The Zon Department Store
The Fun Zon
5-levels; approx. 400,000 sq ft of
commercial space & 200 retail shop lots
Anchor tenant at the Zon Mall; lifestyle shopping
concept store after recent makeover
Top entertainment/F&B hub in JB with
entertainment outlets, pubs & bistros
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The Zon Johor Bahru
Strategic and convenient location
• Located in the heart of JB city
• 10 mins away from Singapore
Causeway by car
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International Airports Outlets
Kuala Lumpur and Melaka
Kuala Lumpur International Airport
Arrival Hall of KLIA with a GBA of 208 sqm
Also Low Cost Carrier Terminal with a GBA of 364 sqm
Melaka Airport
2 outlets at Arrival and Departure Halls with GBA of 31 sqm and 14 sqm respectively
GBA: Approximate Gross Built-up Area
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Border Town Outlets
Perlis, Kelantan and Perak
Catering to tourists travelling between Malaysia and Thailand
Padang Besar, Perlis
• GBA of 4,088 sqm
• Targets tourists at Padang
Besar entry point
Rantau Panjang, Kelantan
• GBA of 483 sqm
• Targets tourists at Rantau
Panjang entry point
Pengkalan Hulu, Perak
• GBA of 465 sqm
• Newly acquired in August
2009
GBA: Approximate Gross Built-up Area
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Outlets at Tourist Destinations
Langkawi and Tioman
Langkawi Island, Kedah
• 3 retail outlets located at Pantai Cenang, Langkawi Bird Park and Langkawi Cable Car with a total GBA of 2,793 sqm
• 1 wholesale outlet at Kuah Town; GBA of 121 sqm
Tioman, Pahang
• Arrival Hall of Tioman Airport ;
GBA 52 sqm
• Departure Hall of Tioman
Airport ; GBA 31 sqm
GBA: Approximate Gross Built-up Area
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Other Outlets
Sea Ports outlets
Melaka and Johor Bahru
Downtown outlets
Selangor, Kuala Lumpur, Penang and Melaka
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DUTY FREE INTERNATIONAL LIMITED
Key Strengths
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Established Market Leader
28 years of operating track record with
established relationships with suppliers
• 36 outlets across
Peninsular Malaysia
• Enjoys economies of scale
• Capture larger market
share via extensive
distribution channels
Largest local
duty-free
market
position other
than airports
Strong
presence at all
leading entry
and exit points
in Malaysia
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Airports
Border towns
Downtown
Seaports
Free zones
Tourist destinations
Monopoly over
duty-free business in
border towns and
duty-free zones
• Along 4 states bordering Malaysia-Thailand
• Johor Bahru duty-free zone
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Stable and Resilient Business
Revenue of DFZ
Subprime
Thailand unrest
Bird Flu
474
252
276
305
2005
2006
2007
2009*
527
573
2010
2011
• Stable / inelastic demand for certain products eg tobacco alcohol
– Resilient against adverse external factors
• Business sustainability despite threats affecting the tourism industry
Note:
•Reflects DFZ’s revenue
•*2009: 12-months pro-rated from 1 January 2008 to 31 December 2009 due to change in financial year-end
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Experienced Management Team
Dato’ Sri Adam Sani bin Abdullah,
Non-Executive Chairman
Saw Lip Piau,
Executive Director and CEO
Lee Sze Siang, Executive Director
(Finance and Corporate Services)
• A self-made entrepreneur in the
plantation, insurance, property
investment and property
management businesses in
various countries
• Also Chairman and non-executive
director of AHB with a controlling
stake since 2000
• Over 30 years of managing family
business and other businesses
• Joined DFZ in September 2008;
under his management, DFI has
grown steadily
• Executes strategic business
directions set by the Board, and
oversees the operations and
business development
• Joined the Group and was
appointed to the board in 2000
• Responsible for the financial
management and corporate
services function, including
advising on financial
management and compliance
matters
Cheah Im Bee,
Financial Controller
Goh Seng Choon, GM
- Group Sales & Marketing
Stuart Saw Teik Siew, Assistant GM
- Group Merchandising
• Joined the Group in 2006
• Oversees the functions of the
finance department
• Has approximately 21 years of
accounting and finance
experience
• Over 22 years of experience in
sales and marketing and related
functions with the Group
• Responsible for sales strategies of
retail and wholesale business;
operational guidance to outlets
in northern Malaysia
• Joined the Group in 2004
• Oversees DFI’s duty-free
merchandising function
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DUTY FREE INTERNATIONAL LIMITED
Financial
Highlights
FYE 28 Feb
23
Revenue (RM’ million)
Change: +8.8%
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Profitability (RM’ million)
Profit Before Tax
(excluding
exceptional
items)
Change: -17.7%
EBITDA Before Exceptional Items
Profit After Tax
84.5
64.5
(excluding
exceptional
items)
Change: -43.7%
Change: +27.3%
Impact of one-time factors in FY11:
• Cost of reverse acquisition written off amounting to RM40.8 million
– Relates to difference between the deemed acquisition cost and the fair value of the net liabilities of the Company
arising from the RTO of the Company by DFZ and DMSB
– Professional fees incurred through issuance of warrants for services in arranging and facilitating the RTO exercise
• Loss on fair value changes of RM10.7 million relating to warrants issued in connection with the RTO
– Relates to change in the fair value of the warrants issued during the financial year, which are designated as derivative
liabilities, against their carrying value.
• EBITDA (excluding exceptional items) increased 27.3% to RM99.4 million in FY11 reflecting the vibrancy of the
businesses and better margins
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Strong Cash Flow Generating Ability
Net Cash from Operating Activities
(RM’mil)
Cash and Cash Equivalents
(RM’mil)
70.0
60.0
FY10
Gearing Ratio (Times)
FY11
FY10
FY11
0.57
0.40
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Dividend Payout Trend
Percentage Dividend Payout Per Ordinary Share of DFZ (%)
17%
20%
12%
8%
FY07
FP09
FY10
FY11
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DUTY FREE INTERNATIONAL LIMITED
Outlook and
Strategies
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Future Prospects and Trends
Growing
economy
• In Malaysia and its
neighbouring
countries
• Spillover effects from Singapore’s
two integrated resorts: Increased
visitorship to the region
• Stable revenue contribution from
border town outlets
• Increase and develop product
range
Increasing
international
tourism into
Southeast Asia
• Explore opportunities for M&A and
JVs
• Connectivity of MRT to JB – 2018
(Tanjung Puteri)
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DUTY FREE INTERNATIONAL LIMITED
Thank You
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