HONG KONG -- Sincere Watch (Hong Kong) Limited, the world premier watch specialist in Asia today reported a 56% growth in revenue to HK$733.2 million for the financial year ended March 31, 2008 - reflecting the buoyant economic outlook and rising consumer sentiment in North Asia.

In particular, the increased demand for the Group's timepieces has benefited from Hong Kong's robust economic growth and higher tourist traffic from China over the past year.

The Group also benefited from the acquisition of Sincere Watch Taiwan (SWTW) last year.

The Group, which is now the sole distributor of Franck Muller watches and accessories in Hong Kong, Macau, China and Taiwan, also enjoyed higher sales from enhanced marketing and branding efforts, and the opening of new boutiques in FY2008. It had a total of eight mono-brand boutiques in North Asia as at Mar 31, 2008. These included Franck Muller boutique in Beijing in April 2007, the Venetian Casino and Resort Macau in August 2007 and the Franck Muller boutique in Shanghai in November 2007.

Gross margins were maintained at 32.4% as gross profit rose 56% to HK$237.4 million from HK$151.9 million. The Group maintained a healthy financial position with no bank borrowings and a 58% increase in cash balance from HK$135.7 million in FY2007 to HK$214.2 million in FY2008.

The Group's profit before taxation and exchange losses rose by 72.3% to HK$122.4 million from HK$71.0 million.

However, the Group stayed profitable, reporting a net profit after tax of HK$34.4 million for the year ended March 31, 2008 compared to HK$43.6 million last year. The lower net profit was due largely to realised and unrealised exchange losses arising from the currency exchange difference when the HK dollar fell against the Swiss Franc since January 2008.

The Group incurred realised currency exchange loss of HK$27.8 million for the financial year 2008 as compared to the realised currency exchange loss of HK$13.2 million recorded in last financial year 2007. The Group also incurred unrealised currency exchange loss of HK$52.7 million for the financial year 2008 as compared to HK$4.5 million in the last financial year.

The exchange difference arose from trade payables denominated in foreign currencies, which were translated at the exchange rates prevailing at the balance sheet dates, and any difference in valuation were then recognised in the income statement as unrealised gains or losses.

Group Earnings per Share (EPS) declined to 8.4 HK cents in FY2008 from HK 10.7 cents in the last financial year. But Group Net Asset Value per share (NAV) improved to HK 54.94 cents as at 31 March 2008 up from HK 51.95 cents as at 31 March 2007. The Group made significant improvement in its cash position as its cash and bank balances rose to HK$214.2 million in FY2008 from HK$135.7 million in FY2007.

The Board has proposed a final dividend of HK 5 cents per share, amounting to HK$20.4 million, representing 59% of net profit for the year, maintaining a similar payout ratio as last year.

Expansion of Distribution Network
The Group has successfully bolstered its presence in North Asia by expanding its distribution network of independent watch retailers and mono- brand boutiques. In FY2008 the Group ran eight mono-brand boutiques – three in Hong Kong, two in Macau, two in the PRC and one in Taiwan, retailing under the brands of Franck Muller and de Grisogono. The Group opened the Franck Muller boutique in Beijing in April 2007, the Venetian Casino and Resort Macao in August 2007 and the Franck Muller boutique in Shanghai in November 2007. Together with the extended Hong Kong Flagship boutique, all communicate the essence of the brand, inspired by a luxury home concept.

The Group's distribution network in North Asia comprises 43 retail outlets run by 23 independent watch dealers as at end March 2008.

Enhanced Brand Management Activities
Sincere stepped up advertising and promotional efforts for the Group's stable of exclusive luxury watch brands, including CVSTOS, de Grisogono and Pierre Kunz which made successful debut in its key markets. These efforts included advertising in newspapers, magazines, billboards, dealer promotions and store promotions for new product launches and store openings.

Going Forward: Prospects
The Group believes that its prospects remain bright.

Mr. Kevin Chau, the Executive Vice-Chairman of Sincere Watch (HK) said: "The strong set of results resonates with the buoyant economy in Hong Kong and the increasing number of high income visitors from the China."

He added: "The Beijing 2008 Olympic Games will be a spur to Asia's tourism growth, with an estimated 4.5 million tourist arrivals. This will  also generate inbound travel within China, with Hong Kong and Macau as likely destinations. To tap the rising demand for luxury timepieces in Hong Kong, we plan to open three more boutiques in the current financial year at Lee Theatre Plaza Causeway Bay, Peninsula Tsimshatsui and 1881 Heritage building Tsimshatsui. And, we will further grow our stable of luxury watch brands by including two more brands in the coming financial year."

"The Group's strong presence in Beijing and Shanghai with our existing 2 boutiques -- will also enable it to capitalize on the expected tourism boom in the two main Chinese cities during the upcoming Olympics 2008. We are also looking for suitable locations to open more boutiques in Beijing," Mr Chau said.

He added: "We are in a strong position to capitalise on the wealth of growth opportunities in North Asia. We will work with our Swiss watch principals to bring forth new inspirations and promote a strong and robust culture of horology. We will continue to launch innovative retail concepts and marketing platforms in North Asia including expanding our portfolio of new luxury brands that have good growth potential. Barring unforeseen circumstances, the Group is optimistic of its outlook and expects to remain profitable for the current financial year."

Sincere Watch (Hong Kong) Limited, the world premier watch specialist in Asia, is the sole exclusive distributor of Franck Muller watches and accessories in Hong Kong, Macau, Taiwan and China, and has established Franck Muller as one of the most desired and popular fine watch brands in the luxury watch segment. Leveraging on its success with Franck Muller, the Group has expanded its brand portfolio and now carries four other brands, namely de Grisogono, European Company Watch, Pierre Kunz and Cvstos.

Courtesy: Sincere Watch (Hong Kong) Limited, Hong Kong

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Posted by Naresh Koshti on 7 July, 2008 11:52:21 AM IST #