EMPEROR WATCH & JEWELLERY LTD.

EMPEROR W&J ANNOUNCES 2013 INTERIM RESULTS

Aug 28, 2013

Financial Highlights (For the six months ended 30 June 2013 (the “Period”))

Despite the unfavourable market conditions, the Group was still able to achieve a revenue growth of 4.1% to HK$3,294 million (1H2012: HK$3,164 million) during the Period.
As a result of relatively keen price competition on watch business, gross profit decreased to HK$798 million (1H2012: HK$844 million). Gross profit margin was 24.2% (1H2012: 26.7%). Given that jewellery gross profit margin always performs higher, the enhancement of jewellery business was able to mitigate the adverse effect from the decline of watch gross profit margin, reflecting the beauty of jewellery arm.
Net profit was HK$157 million (1H2012: HK$220 million). The decrease of net profit was due to the decrease in gross profit margin and mild increase in rental expenses.
The Hong Kong market continued to be the Group’s key revenue contributor, with its revenue increased by 3.2% to HK$2,735 million (1H2012: HK$2,649 million), accounting for 83.0% (1H2012: 83.7%) of the Group’s total revenue.
The Group has taken a pro-active approach for enhancing jewellery business since January 2013, which boosted its segmental revenue by 32.0% to HK$749 million (1H2012: HK$567 million). 77.3% (1H2012: 82.1%) of the total revenue is generated from watch segment.
The Group revealed a strong liquidity position with debt-free as at 30 June 2013. Bank balances and cash on hand amounted to HK$618 million (30 June 2012: HK$181 million) without any gearings.
Dedicated to the Group’s continuous efforts on effective control and highly monitoring of inventory portfolio, the overall inventory level decreased to HK$3,460 million (30 June 2012: $3,801 million) and its inventory turnover days further reduced to 251 days (1H2012: 297 days).

(Hong Kong, August 28, 2013) Emperor Watch & Jewellery Limited (the “Group” or “Emperor W&J”) (Stock code: 887), a leading retailer of luxury watch and fine jewellery, today announces its 2013 interim results for the six months ended 30 June 2013 (the “Period”). Basic earnings per share was HK2.3 cents (1H2012: HK3.3 cents). Emperor W&J proposed an interim dividend of HK0.68 cent (2012: HK0.98 cent) per share.

 
In January 2013, the Group had successfully expanded its coverage from Greater China to Southeast Asia by initiating a presence in Singapore. As for Hong Kong, a Patek Philippe boutique was opened in June 2013 at Nathan Road, Tsim Sha Tsui. As at 30 June 2013, the Group ran a total of 78 stores in Hong Kong, Macau, the PRC and Singapore. The Group’s retail stores in Hong Kong are strategically located at the major high-end shopping places, namely, Russell Street in Causeway Bay, Canton Road in Tsim Sha Tsui and Queen’s Road Central in Central. In terms of shop rental rate per square feet during the Period, these three streets were ranked as world-class top five most valuable shopping streets. Through its extensive presence in these extremely prime areas, the Group enjoys a high penetration rate amongst the mainland visitors and excellent brand visibility.
 
During the Period, the Group continued to offer quality with design on premium “Emperor Jewellery” products to the customers. With key focus on quality gem-sets and fine jadeites among the comprehensive product range, the Group enriched design features to satisfy diversified customers’ taste and enhanced charisma of signature “Emperor Jewellery” collections to raise brand loyalty. Stylish and prestigious gem-sets, bridal collections and fine jadeites continued to be popular items. Meanwhile, new collections with unique themed design were launched regularly at different price points for further fostering the customer loyalty of sophisticated customers and penetrating new shoppers in different income group. After continuous implementation of effective optimisation of jewellery product portfolio during the Period, the Group was able to enhance the jewellery segment among the total revenue mix and the overall capital efficiency.
 
The Group continued to closely collaborate with watch suppliers and launched joint exhibitions during the Period, all of which received positive results. During the Period, the Group hosted numerous jewellery shows for consolidating VIP customers and widening new customer base. By capturing an ever-expanding opportunities over online and social media, the Group also strengthened the marketing efforts and enhanced brand awareness of “Emperor Jewellery” by various cost-effective advertising programs.
 
Evidenced by a solid growth of the mainland visitors’ arrival, Hong Kong has long been a favourable shopping destination for mainland visitors. Significant price differential, authenticity assurance and full assortments provide strong incentives for mainland visitors to purchase luxury watches in Hong Kong. Coupled with the appetites for prestigious brands and the rise of awareness of social status and self-recognition, the Group is poised to capture such market opportunities.
 
The Group believes that Southeast Asia will become a new revenue contributor. The Group will continue to look for other expansion opportunities in Southeast Asia in order to fully capture the luxury consumption growth momentum.
 
Ms. Cindy Yeung, Chairperson of Emperor W&J, said, “We are dedicated to build a prestigious image of “Emperor Jewellery” which focuses on differentiated design and exquisite craftsmanship. With increasingly solid brand recognition among consumers, I am pleased to note an inspiring growth in jewellery segment in the first half of 2013. Looking forward, the jewellery market in Greater China is expected to experience exponential growth given the growing economic independency and westernised lifestyle of the region’s working female. Aligning with this trend, we are striving to accelerate jewellery expansion plan for improving overall margin performance and profitability in the long-run.”
 
Financial Key Figures (Unaudited):
 
HK$’ million 1H2013 1H2012 Changes
Revenue 3,294 3,164 + 4.1%
Gross Profit
798
844 - 5.5%
EBITDA1 220 307 - 28.3%
Net Profit 157 220 - 28.6%
Basic Earnings per Share HK2.3 cents HK3.3 cents - 30.3%
1 EBITDA represents earnings before interest, taxation, depreciation and amortisation of the Group.
 
- End -
 
About Emperor Watch & Jewellery Limited
With long establishment history of over 70 years in Hong Kong since 1942, Emperor W&J (887.HK) is a leading retailer principally engages in the sale of European made luxurious international branded watches, and self-designed fine jewellery products under its own brand, “Emperor”. Through its comprehensive watch dealership, unique marketing campaigns and extensive retail network at prime locations in Hong Kong, Macau, the PRC and Singapore, Emperor W&J established a strong brand image amongst its target customers ranging from middle to high income group from all over the world. Emperor W&J has become a constituent stock of Hang Seng Composite Index in Consumer Goods sector (HSCICG.IND) since 10 September 2012. It is also included in the investment portfolio of the PureFunds ISE Diamond/Gemstone ETF (GEMS.US), which is freely traded on New York Stock Exchange Arca.
 
For more information, please visit its website: www.emperorwatchjewellery.com.
 
 
Investor/Media Enquiries
Ms. Winnie Kwong, Assistant Manager,
Investor Relations Department of Emperor Group
Tel: +852 2835 6791
Email: winniekwong@emperorgroup.com
 
Ms. Anna Luk, Director,
Investor Relations Department of Emperor Group
Tel: +852 2835 6783
Email: annaluk@emperorgroup.com

 

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