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Sustains Business Momentum and Achieves 10% Growth in Turnover to HK$3,858 million

Recommends Final Dividend of HK5.5 cents

Full Year Dividend HK9.5 cents Representing Payout Ratio of 48%

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Delivers Innovative Service Offerings and Upgrades Signature Practices to Achieve Future Growth

Fiscal 2012 Highlights

Turnover increased 10.0% to a record HK$3,858 million
Board of Directors recommended a final dividend of HK5.5 cents. Full year dividend is HK9.5 cents, representing payout ratio of 48.3%
Strong balance sheet reflected by the Group’s net cash position with a cash on hand of HK$939 million
Strong performance in Asia, in particular Greater China
Prosperous projects confirmed in the pipeline
New offices and production complexes in Beijing and Shanghai with total area of 58,000 square metres to open this year, doubling our capacity to capture upcoming  growth opportunities in China 
 

(Hong Kong, 25 January 2013) Pico Far East Holdings Limited (“PICO” or “the Group”, SEHK: 0752), a leading global Total Brand Activation company, today announced its annual results for the 12 months ended 31 October 2012 (the “year”).

During the year, PICO sustained the business momentum of the previous year despite the backdrop of a weak global economy. The Group achieved a turnover of HK$3.858 billion (2011: HK$3.508 billion), representing an increase of 10.0%. Profit for the year attributable to owners of the Company was HK$238.5 million (2011: HK$247.9 million), representing a slight decrease of 3.8%.

The slight decrease in profit was due to some one-off restructuring costs incurred by the consolidation of all our US operations into our Los Angeles office, with the closure of our Chicago office; and the consolidation of our operations in India.

The slight decrease in gross margin was because there were a few big projects which the Group undertook at a lower margin in order to break into certain niche services.  Also, a project in the Museum and Themed Environment segment which the Group have not yet recognised as revenue due to a dispute with the main contractor.

The Board of Directors recommend a final dividend of HK5.5 cents (2011: HK4.0 cents) per ordinary share. Altogether, the full year dividend is HK9.5 cents per ordinary share, representing 48.3% of the earnings per share.

The Group maintained a very healthy financial position as reflected by the Group’s net cash position with a cash on hand of HK$939 million.

Mr. Lawrence Chia, Chairman of Pico, said, “The global economic slowdown did not affect many of our business and geographical segments. Due to the resilience of the Group, many segments delivered good results, particularly those in Greater China and some countries in Southeast Asia, which enabled the Group to mitigate losses in other segments.  Our Exhibition and Event Marketing Services business segment and the Brand Signage and Visual Communication business segment delivered strong growth of 13.2% and 33.0% respectively.”

Business Review
 

The Exhibition and Event Marketing Services segment performance remained stable.

Revenue growth of Exhibition and Event Marketing Services was driven by our innovative service offerings including our Total Brand Activation approach, which successfully brought in new clients like Bloomberg, Chow Tai Fook, Goldman Sachs, SAP, SEAT and Volkswagen.

Through internal capability upgrading and by partnering with high-tech solution providers, we were able to deliver a broad range of creative and content development solutions. At the 2012 London Olympics, we created the three-storey Acer Pavilion at Olympic Park, which included a 3D theatre and interactive games. In the Tengger Desert and across a number of cities in China, we created the Audi Cube road show, in which we utilised integrated content and interactive software to enable the first application of transparent screen technology in China.

One of the significant events of 2012 for Pico was the Yeosu Expo, which ran from May to August in South Korea. With our longstanding local presence in South Korea, the organiser and participating organisations turned to us to deliver 11 themed, international and other pavilions.  This is a major strategic marketing move which will extend our gains from 2010 in terms of our portfolio, relationships and reputation, and act as a stepping stone for our marketing work for the next universal exposition in Milan in 2015.

The Brand Signage and Visual Communication business segment continued to provide a constant revenue stream.

Pico has an excellent track record in retail signage for the automotive sector, banks and international fast food chains in China. Today, we have become the preferred supplier for literally all major car brands in China. In just the 2012 financial year, we provided signage in China for Buick, Chevy, Jaguar, Land Rover, Mercedes-Benz and Nissan. In addition, we handled Rolls-Royce customer lounges worldwide. We also successfully extended our foothold into other parts of the world, through export to Europe and the Middle East for car brands like Infiniti and Peugeot.

In the fast food sector, we completed projects with Burger King, Costa Coffee, Dairy Queen, KFC, Yoshinoya and Xiabu Xiabu this year. Other projects include China Fashion Trade Centre, Total and Sinochem and several others.

The Museum, Themed Environment, Interior and Retail segment saw relatively slow growth, meeting our expectations.

Due to an unfavourable economic climate and sluggish growth in this sector globally, we did not set high expectations for 2012. In spite of these factors, we still completed a number of projects in this financial year, meeting our expectation.

Examples are Civil Aviation Department headquarters in Hong Kong, Ferrari Myth Museum in Shanghai, HTC, Mercedes-Benz and Panasonic stores in Vietnam.

The Conference and Show Management segment also met our expectations.

Last year our growth of 200 percent in this segment was mostly attributed to the ITMA (Internationale Textilmaschinen Ausstellung) show in Barcelona - the world’s largest international textile machinery show, which is held once every four years. This year, we organised ITMA Asia held in Shanghai in June, essentially the Asian edition of ITMA. ITMA Asia ended on a high note, despite the difficult global economic climate, with a 30 percent increase on the record numbers of both visitors and exhibitors of the last edition. In a further boost, we have also been appointed to handle the upcoming ITMA Asia in Shanghai in 2014 and 2016, and ITMA 2015 in Milan.

Geographical Review
 

Geographically, we continued to do well in Asia, particularly in Greater China − which includes Hong Kong, Macau, Taiwan and the PRC − accounted for 55.9% (2011: 50.5%) of the Group’s revenue of HK$3,858 million (2011: HK$3,508 million). South Asia (Singapore, Malaysia, Vietnam and India), accounted for 27.5% (2011: 28.6%), and the Middle East accounted for 5.0% (2011: 7.7%). The remaining 11.6% (2011: 13.2%) was derived from Europe, North America, Japan and Korea.

To double our existing capacity in order to capture the new growth opportunities in China, our new 17,000 square metre office and production complex in Beijing will commence operations in May 2013, while the Group’s largest office and production complex − at 41,000 square metres − in Shanghai will be ready by the third quarter of 2013.

Outlook                                  

Looking ahead, the Group still relies on the strength of its Asian business, particularly in the China market. We will increase our global presence, enhance our world class delivery and expand our signature practices to new and untapped markets.

Chairman Chia concluded, “2012 was a year of international successes and rewards, which further enhanced Pico’s leading position. We won the Gold Award at the Event Marketing Agency of the Year Awards by Marketing Magazine, we were ranked second by America’s Special Events Magazine, and were ranked third in CEI Asia’s list of top event companies. We will continue to invest in technology, infrastructure and training instead of cutting such expenses for short-term profitability. We believe that it is important to invest in these areas in order to deliver innovative and value added services to our customers; a strategy which will allow us to sustain long-term profitability.”

Please visit us at www.pico.com to learn more about our company and about Total Brand Activation.