Newsroom

Turnover reported HK$3,319 million

Operating Margin improved to 8.41%

Recommends Final Dividend of HK5.5 cents

Full Year Dividend HK10.0 cents representing a Payout Ratio of 57.57%



Highlights

- Turnover reported HK$3,319 million, representing a decline of 13.97%

- Operating Margin improved to 8.41% (2012: 7.88%)

- Board of Directors recommend a final dividend of HK5.5 cents. Full year dividend is HK10.0 cents, representing a payout ratio of 57.57%

- Significant projects confirmed in the pipeline: Formula One Singtel Singapore Grand Prix 2013-2017, Sochi Winter Olympics Feb 2014, Shanghai’s world-famous theme park 2014;

- New offices and production complexes in Beijing and Shanghai with total area of 58,000 square metres commenced operation this year, doubling our capacity to capture upcoming growth opportunities in China

- Forward-thinking management principles, optimization of structure and systems, improved risk and cost controls will continue to drive future growth when the economy upturns
 

(Hong Kong, 21 January 2014) 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 2013 (the “year”).

Against the backdrop of an ongoing tough economic environment, ripple effects were felt across international trade and in the meetings, incentives, conventions and exhibition (MICE) industry. Prior to the current year, the Group has achieved three consecutive years of record-breaking results whilst this year there has been a  slight decline in turnover to HK$ 3,319 million (2012: HK$3,858 million), representing a decrease of 13.97%.

Although profit for the year attributable to owners of the Company declined by 11.48% to HK$ 211 million, operating margin improved to 8.41% (2012: 7.88%). Earnings per share were HK 17.37 cents (2012: HK19.66 cents).

These results reflect improved efficiencies, coupled with tightened risk and cost controls.

The Board of Directors recommend a final dividend of HK5.5 cents (2011: HK5.50 cents) per ordinary share. Altogether, the full year dividend is HK10 cents per ordinary share, representing 57.57% of the earnings per share.

Mr. Lawrence Chia, Chairman of Pico, said, “The global economic slowdown has had inevitable knock-on effects which have been felt across the entire MICE industry. Also, given that this was a year lacking in mega events, as a result, our largest core business segment – exhibition and event marketing services – experienced a decline. Fortunately, we anticipated this situation well in advance and worked hard to secure new contracts and retain existing clients. On the positive side, our conference and show management segment reported growth, while our brand signage and visual communication segment remained a key growth driver with a profit contribution higher than last year.”

Business Review
 

Exhibition and Event Marketing Services

Our innovative Total Brand Activation service model continues to receive a positive response from the market. Many of our clients engage us to pinpoint their unique brand challenges, give strategic advice, conduct research, develop strategies and deliver implementation across a wide range of platforms. Beyond the range of conventional exhibitions and events, we successfully delivered the Volkswagen Santana 45-day transcontinental legend tour from Germany to China, Dell’s CIO leadership campaign in China, Toyota’s Make Some Noise campaign in Dubai, and many other renowned automotive brand events in China.

Other significant accomplishments included starting the first year of a renewed three-to-five year contract with the Formula One Singtel Singapore Grand Prix; after the successful completion of our first five-year contract which ran from 2008-2012. Another milestone was our successful delivery of temporary infrastructure at competition venues for the Sochi Winter Olympic test events in the winter of 2012/2013, which enabled us to subsequently win the contract for the Sochi Winter Olympics in February 2014. Given our accomplishments at the Shanghai World Expo in 2010 and Yeosu Expo in 2012, the upcoming universal exposition in Milan 2015 offers tremendous opportunities to the Group. The first contract we secured was to provide conceptual design for the Malaysian pavilion covering an area of about 2,000 sq. m.

Brand Signage and Visual Communication

Thanks to our long-standing track record, we remain a major supplier of retail signage for the automobile sector and international fast food chains in China.

Our appointments by Rolls-Royce and Rousseau-Peugeot for provision of visual identity signage worldwide continues, with both contracts lasting until 2014. We secured another major contract with Jaguar Land Rover showrooms throughout China to provide visual identity, interior displays, furniture and customer area solutions through 2014. During the year, we continued to serve major international car companies and their dealers in China including Cadillac, Changan, Chevy, Dongfeng Peugeot, Infiniti, Lexus, Mercedes-Benz, Nissan, Peugeot and Shanghai General Motors.

We also continue our contracts with several fast food chains — Dairy Queen, Yoshinoya and Yonghe Dawang — lasting through 2014.

Our contribution to Bejing’s urban refurbishment continues with more contracts to upgrade the surrounding landscape through 2014 along the Beijing Metro Lines 6 and 8, as well as providing all necessary wayfinding signage.

Other contracts running from 2013 to 2014 are with Chengdu Shihao Plaza, Citibank and Sinochem Oil in China; and MTR Express Rail Link Hong Kong Section.

Museum, Themed Environment, Interior and Retail

Due to the unfavourable economic climate globally, we did not set high expectations for 2013. In spite of these factors, we still completed a number of projects in this financial year: Ace Jerneh Insurance and Johnson & Johnson offices in Kuala Lumpur, Bahrain Defence Force Military Museum, Beijing Cultural Creative Industry Visitor Gallery and Chinese Gardens and Landscape Architecture Museum in Beijing, Ferrari and Toyota showrooms in Singapore, Huawei showroom in Nigeria and Qatar TV studio in Doha.

We have already commenced work on contracts which we were awarded by a world-famous theme park in Shanghai; a substantial portion of these contracts will be completed in 2014.

Conference and Show Management

The rate of return on some of our newly-developed shows was not satisfactory. In light of this, we have taken steps to halt future shows for which prospects are not encouraging.

Highlights of the financial year 2013 included a number of recurring shows which were profitable as well as some new projects like 14th Asia Pacific Life Insurance Congress in Manila, 50Plus Expo in Singapore, InfoComm China and India in Beijing and Mumbai and Singapore International Land Transport Congress 2013

The Group has already secured contracts for a number of recurring shows which will run throughout 2014, including the 36th Asia Pacific Dental Congress in Dubai, EMTE-EASTPO Machine Tool Exhibition and ITMA Asia and CITME in Shanghai, and the Second Asian Congress on Pain in Taipei.  In 2015, aside from the ITMA show in Milan, we have been appointed by the Myanmar Tourism Federation to manage the ASEAN Tourism Forum in January of that year.

Geographical Review
 

Geographically, Greater China – including Hong Kong, Macau, Taiwan and the PRC – accounted for 62.2% (2012: 55.9%) of the total turnover of HK$3,319 million.

Doubling our existing capacity in order to better service the ever-growing clientele of Chinese national enterprises as well as multinational enterprises and renowned brands operating in China, our expanded facilities, totaling 58,000 sq. m. in Beijing and Shanghai commenced operations this year.

Outlook                                  

Looking ahead, our business in Asia will still continue to be a key driver of growth in 2014. During the year, we will deliver a number of high-profile exhibitions and events like Auto China in Beijing, Auto Guangzhou, Automechanika Shanghai, China Mobile Global Partner Conference in Guangzhou, China Sourcing Fairs in Hong Kong and New Delhi; Consumer Electronics Show in Las Vegas, Hong Kong International Fur and Fashion Fair, Hong Kong Jewellery and Gem Fair, ITU Telecom World in Bangkok, Mobile World Congress in Barcelona, Singapore Air Show, London Singapore Day, HSBC Golf Champions in Shanghai and Singapore, Food and Hotel Asia and International Furniture Fair in Singapore.

To secure more control of our position in the face of uncontrollable environmental factors such as slow global growth, our business model is evolving towards taking a more dominant role in the market and a bigger share of the marketing value chain. This strategy is working and our forward-thinking management principles are enabling us to proactively counter external challenges and develop business initiatives.

As Total Brand Activation gains traction in the wider market, we are confident that this will continue to grow as a major arm of our business and help us win major branding contracts across a wide spectrum of marketing activities, while our global presence will add to our edge and help to extend coverage for existing and new clients.

Chairman Chia concluded, “2013 was a tough year, and we needed to tighten risk and cost controls to achieve improved efficiencies and better operating margins. With the global slow growth projected to last through 2015, the Group is determined to capture every available opportunity in 2014 – a year with more mega-events – while continuing our cautious approach and maintaining our tightened risk controls. The Group is consistently continuing to build a sustainable growth model, and despite the current market conditions we have continued and strengthened investment in our global service and support organisation to keep at the forefront of the ever-changing market environment.”