HONG KONG, Nov. 19 /PRNewswire/ --

-- Robust rise in profit due to both realised and unrealised foreign
exchange gain
-- Earnings per share climbed from 6.5HK cents to 11.2HK cents
-- Net asset value rose to 60.7HK cents per share as at 30 September 2008
from 54.9HK cents per share as at 31 March 2008
-- Cash in hand amounted to HK$122 million
-- Sales reflected contributions from new outlet in Macau

Sincere Watch (Hong Kong) Limited ("the Group"), Asia's premier watch specialist, posted a 73% growth in net profit attributable to shareholders to HK$45.8 million for the six months ended September 30 2008 (1H FY2009).

This profit surge was in large part due to the realised and unrealised exchange gain of HK$36.2 million versus HK$8.3 million loss for the same period of last year.

Such foreign 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 differences in valuation were then recognised in the income statement as unrealised gains or losses.

The Group's profit before taxation and foreign exchange gain/loss (ie the Group's operating profit excluding foreign exchange gain or loss) had eased in the period under review to HK$18.7 million from HK$40.6 million in the same period last year.

However, gross margins improved from 29.3% to 34.9%, reflecting an enhanced product mix of higher margin timepieces for the period under review.

Turnover for the six months ended 30 September 2008 ("H1 FY2009") however eased by 5.7% to HK$290.1million from HK$307.7 million for the previous corresponding six months ended 30 September 2007 ("H1 FY2008").

This was mainly due to the soft demand for the Group's timepieces from its distribution network across North Asia in light of the lack of confidence in the economic environment owing to the global financial market's meltdown. However, the contribution from the additional Franck Muller boutiques in Hong Kong and Macau moderated the impact of sales reduction in distribution and helped to maintain the overall sales performance of the Group significantly.

On the bottomline, the Group's earnings per share climbed 72.3% to 11.2HK cents during the period under review. Net asset value also rose to 60.65HK cents per share as at 30 September 2008, up 10.4% compared to 54.94HK cents per share as at 31 March 2008.

The Group's cash position remains sound. The Group has no debts and its cash position is at HK$122 million in the period under review.

PERFORMANCE BY GEOGRAPHIC MARKETS

The Group's key geographic markets continued to perform well and stayed profitable.

Sales contributions from PRC and Macau surged 167% to HK$64.3 million from HK$24.1 million in the corresponding period last year. The jump in sales was mainly due to the opening of the Franck Muller boutique at Venetian Macau in August 2007.

Revenue from the other key markets of the Group however softened.

Sales in Hong Kong eased about 21 % from HK$252.2 million to HK$199.9 million -- reflecting the lower demand for luxury timepieces in Hong Kong.

The Group's Other Asian markets also experienced lower sales. Revenue contribution decreased by 18% to HK$25.8 million compared with HK$31.5 million for the corresponding period last year. This was attributed to reduced demand resulting from the impact of the global financial crisis and the sharp economic slowdown.

PRODUCT PORTFOLIO AND EXPANSION OF DISTRIBUTION NETWORK

The Group remains the sole distributor of Franck Muller watches and accessories in Hong Kong, Macau and the PRC. Its product portfolio also includes exclusive luxury brands -- de Grisogono, European Company Watch, Pierre Kunz and Cvstos.

In the past six months, the Group maintained its overall brand portfolio as it focused its attention on strengthening its presence in North Asia, by growing its distribution network of independent watch retailers and its own operated mono-brand boutiques. These mono-brand boutiques form a vital part of the Group's brand management strategy as they are located in prime shopping areas and act as a showcase for the exclusive luxury brands that the Group represents.

As at 30 September 2008, the Group has 10 mono-brand boutiques -- five 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 has successfully established a network of 44 quality watch distributors retail outlets run by 23 independent watch dealers in Hong Kong, Macau, the PRC and Taiwan.

It has recently added three new Franck Muller boutiques -- at Lee Theatre in Causeway Bay, Peninsula in Tsimshatsui and Venetian Macau.

BRAND MANAGEMENT ACTIVITIES

As part of its brand management activities, the Group maintained its advertising and promotion efforts, including advertising in newspapers, magazines, billboards, as well as conducting product launch promotions with dealers and other brand events like the Franck Muller parties in Hong Kong and Beijing and Franck Muller Super Car Tour in Singapore.

OUTLOOK AND PROSPECTS

Executive Vice-Chairman of Sincere Watch (Hong Kong) Limited, Mr Kevin Chau said: "Going forward, the overall global economic outlook appears challenging due to the ongoing global financial crisis. While this has affected demand for luxury goods, the Group will continue to build on its established goodwill with its local retail partners and working together to introduce fresh initiatives to maintain a robust culture of horology. At the same time, over the course of the second half of this financial year, we will conserve capital expenditures and improve our operations to enhance positive cash flows and maintain a sound balance sheet position. The Group has maintained cash and bank deposits of HK$122 million and no outstanding bank loan. "

About Sincere Watch (Hong Kong)

Sincere Watch (Hong Kong) Limited, the leading 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.

The Group has a large network of independent watch retailers through which the luxury timepieces are distributed. As at September 30 2008, the Group has successfully established a network of 44 quality watch distributors retail outlets run by 23 independent watch dealers in Hong Kong, Macau, the PRC and Taiwan.

In addition to its dealer distribution network and as part of its brand management strategy, the Group currently has ten mono-brand boutiques -- five in Hong Kong, two in Macau, two in the PRC and one in Taiwan, retailing under the brands of Franck Muller and de Grisogono. Retailing under the brands of Franck Muller and de Grisogono, these mono-brand boutiques are well received by customers and are located in prime shopping areas to showcase the full collection of these very exclusive brands.

For more information, please contact:

Ms Tham Moon Yee or Mr Lee Yew Meng
Tel: +65-6227-0502
Fax: +65-6227-5663
Email: tmy@stratagemconsultants.com or
yewmeng@stratagemconsultants.com SOURCE Sincere Watch (Hong Kong) Limited