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HONG KONG, July 20, 2010 - (ACN Newswire) - Hong Kong Resources Holdings Company Limited ("HKRH" or the "Group"; SEHK: 2882) today announced its first annual results after its completion of the acquisition of the retail business of gold and jewellery products under the trade name of 3D-GOLD ("3D-GOLD") from 3D-GOLD Jewellery Holdings Limited in July 2009.
For the year ended 31 March 2010, the Group's turnover, increased 12.6 times to approximately HK$1.29 billion compared with a turnover of approximately HK$95.1 million in the last fiscal year. Gross profit rose by 527 times to HK$348.0 million (FY2009: HK$659,000). The substantial growth in both turnover and gross profit was mainly driven by the retail business of gold products, and other precious metal and jewellery products from the 3D-GOLD acquisition, which also pushed up the gross profit margin to 27.0% (FY2009: 0.69%).
Profit before taxation was HK$244.8 million (FY2009: HK$275.2 million). Excluding the non-recurring discount on the acquisition of 3D-GOLD, profit before taxation was HK$43.9 million, demonstrating a significant improvement from a loss before taxation of HK$69.5 million in the previous financial year if the non-recurring gain of HK$344.7 million was excluded. Profit for the year and total comprehensive income for the year was HK$223.5 million (FY2009: HK$275.2 million). Basic earnings per share were HK13 cents (FY2009: HK104 cents).
The Board of Directors has proposed a payment of a final dividend of HK0.35 cents (FY2009: Nil) per share. Together with the interim dividend of HK0.7 cent paid earlier, the total dividend for the year will be HK1.05 cents (FY2009: Nil) per share.
As at 31 March 2010, the Group maintained a healthy financial position with bank balances and cash of HK$156.3 million (31 March 2009: HK$115.8 million).
Dr. Kennedy Wong, Chairman of HKRH, said, "The year 2009 was a milestone of HKRH's history. This was signified by our penetration into the gold and jewellery retail market in the Greater China region through our successful acquisition of 3D-GOLD. The past year also marked the beginning of our five-year strategic plan. The Group, under the inspired leadership of the management and tireless efforts of our staff, has achieved in eight months a profit and growth that restored the Group to a healthy position in the market. Same-store-sales growth in the Mainland China and Hong Kong also reached 9.8% and 19.7% respectively since 3D-GOLD acquisition. Such performance speaks well for our business model, strategy and execution capabilities."
The Group has focused on the retail business of jewellery products subsequent to the 3D-GOLD acquisition. During the year, turnover of this major business amounted to approximately HK$1.27 billion, accounting for 98% of the total turnover. Under HKRH's ownership and management, 71 new shops and counters were opened in Hong Kong, Macau and Mainland China up to the date of the announcement. In July 2010, the Group had 245, 12 and 2 points of sales under the "3D-GOLD" brand in Mainland China, Hong Kong and Macau respectively, as well as 25 under "La Milky Way" in Mainland China. Of the points of sales in Mainland China, 127 are self-operated points of sales while 143 are franchise points of sales.
In addition to the jewellery retail network, the Group also diversified its sales channels in the physical gold market. In October 2009, the Group entered into a cooperation agreement with The Agricultural Bank of China Limited ("ABC"). Under this agreement, the Group will gradually sell gold bullion products on consignment basis through ABC's existing network of 24,000 branches, allowing it to boost sales and strengthen brand exposure in the Mainland China market with only a minimal capital expenditure on shop leases and renovation and other working capital.
To enhance the brand recognition of the "3D-GOLD" brand, the Group embarked on different initiatives including joint promotion, sponsorship, exhibitions, etc., including the ongoing appointment of Ms. Kelly Chen as its spokesperson, participation in the Shenzhen International Jewellery Fair, collaboration with Hong Kong Famous Fashion Designer, Mr. Dorian Ho, to launch a new bridal collection, etc. In March 2010, 3D-GOLD became the Gold Sponsor of the Hong Kong's participation in EXPO 2010, Shanghai, China, and produced a replica of gold-plated bronze "Golden Bauhinia Blakeana" statue for the event.
"We are honoured by inclusion of our 3D-GOLD brand within 'China's 500 Most Valuable Brands' in 2010 as compiled by World Brand Lab. Our 3D-GOLD brand ranked 182, and second among the 'jewellery category' with a value of RMB4.8 billion, marking the first time that 3D-GOLD has won this honour. This is great recognition on our conscientious efforts on brand building over the past months," Dr. Wong added.
Looking ahead, the world economy is recovering from the financial crisis, the impact of which on the luxury market has also been alleviating. Among all economies, China is demonstrating the largest market potential. According to the National Bureau of Statistics, the total retail sales of gold and silver jewellery in the PRC for the first six months of 2010 increased by 43% over the same period last year. Indeed, rising spending power coupled with the trust in gold as a store of value has boosted Chinese customers' demand for gold products. Therefore, it is expected that Mainland China will remain the focus of the Group's business expansion.
To capture the opportunities ahead, the Group will actively expand the retail business, with priority on cities or regions and focus on franchise operation to accelerate growth through highlighting the popular "3D-GOLD" brand in the PRC. The Group is concurrently exploring opportunities to establish a geographical footprint beyond Greater China. In April 2010, the Group entered into an agreement with ropponqi.WAVE Group Inc. ("WAVE"), an audio-video retail chain in Japan, to set up sales counters in WAVE's chain stores across Japan selling jewellery products under the Group's "3D-GOLD" and "La Milky Way" brands. The first counter will be opened in the prestigious Ginza shopping district in Tokyo, which will not only attract local customers' attention, but also enhance the Group's brand image among Mainland tourists.
Dr. Kennedy Wong concluded, "Being optimistic about our prospects ahead, we will stay on course to capture opportunities generated by surging purchasing power in the Asia-Pacific region, particularly in China. We will continue to extend our retail operations, opening about 100 stores in the PRC during each of the coming three years with a target of 500 stores by 2012. In the long run, we aim at establishing a vertically integrated business model from gold mining, volume trading of physical gold to retailing of gold jewellery products, with the ultimate goal to maximise the shareholders' value."
Contact:
Hong Kong Resources Holdings Company Limited
Herbert Hui,
Head of Investor Relations & Corporate Communications Department and Executive Director
Thisby Wong,
Manager, Corporate Communications Department
Phone : +852 3926 3613
Email : hh@hkrh.hk / thisby@hkrh.hk
Strategic Financial Relations Limited
Heidi So / Derek Lee / Angelus Lau / Angela Ng
Phone : +852 2864 4826 / 4858 / 4805 / 4855
Email : heidi.so@sprg.com.hk / derek.lee@sprg.com.hk / angelus.lau@sprg.com.hk / angela.ng@sprg.com.hk
Topic: Earnings
Source: Hong Kong Resources Holdings Company
Sectors: Retail & eCommerce, Daily Finance
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From the Asia Corporate News Network
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