Emperor Watch & Jewellery Announces 2012 Interim Results. Revenue Grows 20.0% to HK$3,163.7 Million

EMPEROR W&J ANNOUNCES 2012 INTERIM RESULTS
REVENUE GROWS 20.0% TO HK$3,163.7 MILLION

Financial Highlights (Unaudited):

1 Net loss on derivative financial instruments was a non-cash item recognised in consolidated statement of comprehensive income which related to fair value loss on initial recognition and fair value change at period ended.
2 EBITDA represents earnings before interest, taxation, depreciation and amortisation of the Group.

(Hong Kong, August 28, 2012) 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 2012 interim results for the six months ended 30 June 2012 (the “Period”).

During the Period, the Group reported a revenue of HK$3,163.7 million (1H2011: HK$2,629.1 million), representing a growth of 20.3% from the same period last year. The Hong Kong market remained the Group’s major revenue contributor, with its revenue increased by 23.2% to HK$2,649.3 million (1H2011: HK$2,150.4 million) in the Period, accounting for 83.7% (1H2011: 81.8%) of the total revenue. During the Period, 82.1% (1H2011: 82.5%) of the Group’s total revenue is generated from watch segment. Gross profit amounted to HK$843.8 million (1H2011: HK$752.0 million). Gross profit margin was26.7% (1H2011: 28.6%).
Emperor W&J Announces 2012 Interim Results
28 August 2012

Noteworthily, the Group faced a high base when compared with the same period last year. This was driven by two factors: (1) revenue boosted in Hong Kong market in the same period last year triggered by a shift of luxury shopping destination from Tokyo to other Asian regions (including Hong Kong) following the Great East Japan Earthquake in March 2011; and (2) gross profit margin was relatively high in the same period last year due to the substantial and frequent price hikes implemented by watch suppliers as a result of Swiss Franc’s appreciation and rising raw material costs.

EBITDA and net profit were HK$306.9 million and HK$219.5 million respectively, as compared to HK$354.4 million and HK$264.6 million for the same period last year excluding the net loss on derivative financial instruments. The decreased EBIDTA and net profit performance were owing to the decrease in gross profit margin and rising rental expenses. Basic earnings per share was HK3.3 cents (1H2011: HK4.3 cents). Emperor W&J proposed an interim dividend of HK0.98 cent per share.

As at 30 June 2012, the Group had 86 stores in Hong Kong, Macau and the PRC. 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 and Nathan Road in Tsimshatsui. Russell Street and Canton Road are now recognised as renowned shopping areas in the world. With the lead of iconic flagship store located in 1881 Heritage, the Group can capture both local shoppers and mainland visitors.

In January 2012, the Group opened a double storey mega store in Queen’s Road Central, marched with a number of high-end watch brands and full collections of “Emperor” jewellery.

In the same month, a Cartier boutique was opened in Russell Street, Causeway Bay, where it offers elegant and fine timepiece collections. Such collaboration demonstrates management’s dedication to foster solid relationships with leading watch brand suppliers, thereby achieving “win-win” situations where both leading watch brands and the Group could enjoy brand enhancement through their presences in extreme prime areas.

To celebrate the 70th anniversary of Emperor Group this year, intra-group companies within Emperor Group had initiated a series of promotional campaigns. Benefited from the enhanced “Emperor” brand exposure, the Group had enjoyed extensive media coverage and strengthened brand image at low cost. The Group had also sharpened its marketing efforts towards niche market segments. During the Period, the Group launched Emperor Jewellery Bridal Collection, showcasing engagement rings, wedding bands and bridal jewellery for engaged couples and brides-to-be.

Looking ahead, the Group is seeking to expand its market coverage in the tourist spots of other Asian countries, to fully capture the luxury consumption growth momentum among the Chinese speaking communities. As for the PRC market, the Group will take a moderate and prudent approach on store expansion plan.

In the long-run, the Group will strive to improve profitability and overall margin performance through stepping up the portion of higher-margin jewellery segment. Given the more intensified demand towards diamond by affluent consumers coupled with a declining diamond mineral reserve, the Group is looking forward to the promising diamond jewellery market in the PRC. The growing economic independency and westernised lifestyle of working female in the PRC will also accelerate jewellery goods consumption.
Emperor W&J Announces 2012 Interim Results
28 August 2012

Ms. Cindy Yeung, Chairperson of Emperor W&J, said, “We stay optimistic towards luxury consumption market in the Greater China region given the rising spending power and expansion of middle income group in the PRC. We will strive to expand the jewellery segment in order to promote sustainable profit. Riding on the Group’s consistent dedication to exquisite craftsmanship on jewellery and the prestige “Emperor” brand endorsement, we are confident that jewellery segment will be the key growth driver to fuel the Group’s long term development.”

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About Emperor Watch & Jewellery Limited
With long establishment history of 70 years in Hong Kong since 1942, Emperor W&J is a leading retailer principally engaged in the sale of European made luxurious international branded watches, and self-designed fine jewellery products under its own brand, “Emperor”.

Through its extensive retail network in Hong Kong, Macau and China at prime locations,comprehensive watch dealership and unique marketing campaigns, 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 will become a constituent stock of Hang Seng Composite Index in Consumer Goods (“CSG”) sector on 10 September 2012.

For more information, please visit: 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, Associate Director,
Investor Relations Department of Emperor Group
Tel: +852 2835 6783
Email: annaluk@emperorgroup.com