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Dear valued shareholders and partners,

Sharpening Our Focus

In FY2020, the Group aggressively expanded its medical aesthetics segment through the Accrelist Medical Aesthetics group of companies (“A.M Aesthetics”), growing its network of clinics both locally and overseas. The Group also ventured into the distribution of medical aesthetics products through A.M Skincare Products Pte. Ltd. (“A.M Skincare”) and proposed plans to transform Accrelist into the first medical aesthetics focused company listed on SGX.

These efforts reflect our continued belief in the long-term potential of the medical aesthetics business, and we are pleased to report that A.M Aesthetics recorded a 46.8% increase in revenue from S$3.4 million for FY2019 to S$5.0 million for FY2020.

In late 2019, the Group conducted a strategic review of its business and proposed several transactions to unlock the value of our investment in Jubilee Industries Holdings Ltd. (“Jubilee”), reward shareholders and focus on maximising the potential value of our medical aesthetics business.

Shortly after these plans were announced, the Covid-19 pandemic unfolded and delivered a blow to global business sentiment and economic activity. As a result, the Group had to terminate its proposed disposal of Jubilee shares, proposed capital reduction and proposed distribution of Jubilee shares. The termination allowed both the Company and Jubilee to focus on the immediate task of strengthening their respective operations amidst the evolving Covid-19 pandemic.

Despite the temporary setback, the Group remains committed to its long-term vision of shifting Accrelist’s primary focus into the lucrative medical aesthetics segment.

Brief Overview of FY2020

Overall, the Group’s revenue decreased by S$28.2 million or 16.9% from S$167.1 million for FY2019 to S$138.9 million for FY2020.

The revenue decrease was mainly due to external headwinds faced by subsidiary Jubilee’s Electronic Business Unit (“EBU”). Revenue from the EBU decreased by 24.7% or S$35.9 million from S$145.0 million for FY2019 to S$109.2 million for FY2020 due to the impact of the global Covid-19 pandemic and weak global demand as a result of the trade tensions between the USA and China.

Within Jubilee, the challenges faced by the EBU was offset by a S$6.0 million increase in revenue achieved by Jubilee’s Mechanical Business Unit (“MBU”). The 32.2% increase from S$18.7 million for FY2019 to S$24.7 million for FY2020 was due to the inclusion of full year sales revenue from Honfoong Plastics Industries Pte. Ltd. (“HFPL”) and the significant increase in sales orders from new and existing customers amidst the shift of demand to Southeast Asia following ongoing trade tensions.

The bright spot delivered by Jubilee’s MBU reflects the Group’s strategic involvement in Jubilee and the foresight to invest and grow the MBU segment to broaden its customer base and diversify its revenue stream. Jubilee’s total revenue decreased by 18.2% from S$163.7 million for FY2019 to S$133.8 million for FY2020.

Amidst the challenging environment, the Group recorded a net loss of S$12.9 million for FY2020 as compared to a net profit of S$0.9 million for FY2019. The loss attributable to equity holders of S$12.0 million comprised of various non-cash expenses including:

  • One-off remeasurement loss on financial liability of S$2.8 million
  • Accrelist share of loss in Jubilee where share of non-cash expenses amounted to S$1.8 million
  • Amortisation and depreciation expenses of S$1.8 million and S$2.4 million respectively
  • Impairment loss on intangible assets of S$1.9 million

The Group’s actual cash losses amounted to S$1.3 million after excluding non-cash expenses.

A.M Aesthetics expanded aggressively in FY2020 as the Group identified medical aesthetics as its key focus area. With the addition of A.M Aesthetics’ fifth medical aesthetics clinic at Clementi Mall, the Group’s network of clinics now covers almost all regions in Singapore.

Beyond Singapore, A.M Aesthetics entered into a strategic collaboration with South Korea’s Ozhean Skin and Plastic Surgery, enabling the Group to gain significant expertise from leading practitioners. In FY2020, A.M Aesthetics opened its first two overseas medical aesthetics clinics in Penang and Kuala Lumpur, Malaysia.

The Group has also ventured into the distribution of medical aesthetics products through A Skin to broaden its revenue stream.

The Group’s subsidiary A Tech Media Pte. Ltd. (“A Tech Media”) has ventured beyond fintech to provide services and solutions powered by facial recognition and artificial intelligence as a systems integrator. The move reflects the Group’s ongoing efforts to identify new areas of growth.

Technology has been at the centre of USA-China trade tensions which culminated in US sanctions against Huawei which had a negative effect on our Chinese customers. As their projects were delayed, demand for electronic components also declined. This significantly impacted Jubilee’s EBU as China is its largest market. However, Jubilee’s MBU was able to successfully capture new opportunities from customers who shifted their source of purchases towards the ASEAN region amidst the trade tensions.

Government-imposed restrictions aimed at curbing the spread of Covid-19 caused significant disruptions to supply chains and consumer demand around the world with negative effects on our business.

Expenses incurred from longstanding practices during Chinese New Year festivities at Jubilee’s recently acquired Honfoong Plastics Industries Pte. Ltd. came under investigation by the Corrupt Practices Investigation Bureau. The expenses incurred are not material to the Group’s financial position. We deny any wrongdoing and will continue to cooperate with the authorities. All of us at Accrelist remain committed to the principles of integrity, commitment and innovation as we work together to overcome the challenges facing the Group.

Outlook and Future Plans

Despite the impact of Covid-19, we remain confident that the medical aesthetics segment holds significant long-term potential for the Group. Following the easing of Covid-19 related restrictions in both Singapore and Malaysia, we are encouraged by the support of our customers.

We will take a measured approach to sustainably grow the Group’s network of medical aesthetic clinics. Plans are underway to set up more clinics in Johor Bahru and Ipoh, Malaysia following the recent setup of the Group’s second clinic in Kuala Lumpur.

While the previously announced proposed transactions had to be terminated due to the challenging business environment, we remain committed to unlocking the value of Jubilee and growing our medical aesthetics segment. The Group is exploring potential partnership opportunities with strategic investors to help realise our vision to become the first medical aesthetics focused company listed on SGX.

As for Jubilee, we continue to review existing processes to identify areas for cost optimisation and will explore strategies to diversify its customer base and expand its product offerings to include higher margin products.

While we expect prolonged impact from the trade tensions between the USA and China and the evolving Covid-19 pandemic, we are confident that the Group is taking the right steps to address the unprecedented challenges and will not lose sight of our long-term goal to deliver value for shareholders.

A Note of Appreciation

While many aspects of our daily lives have been disrupted following the impact of Covid-19, I am thankful for the dedication and sacrifices made by our colleagues to support the Group’s efforts to adapt to the new normal.

I would also like to take this opportunity to express my sincere gratitude to all our valued shareholders and business partners who continue to show us their support during these challenging times as we seek to emerge stronger from this crisis.

Thank you.

Mr Terence Tea Yeok Kian
Executive Chairman and Managing Director Accrelist Ltd