PICO FAR EAST HOLDINGS LIMITED Turnover increases 15.5% to HK$3,833 million
Profit increases 13.9% t0 HK$241 milion
Board Recommends Final Dividend of HK6 cents
Full Year Dividend HK10.5 cents Representing Payout Ratio of 53.1%
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Fiscal 2014 Highlights
- Turnover increased by 15.5% to HK$3,833 million
- Profit Attributable to Owners of the Company increased by 13.9% to HK$240.5 million
- Gross profit margin slightly dropped by 1.4 percentage point to 29.7%
- Board of Directors recommended a final dividend of HK6 cents, full year dividend of HK10.5 cents, payout ratio being 53.1%
- Strong financial position reflected by the Group's net cash balance of HK$840 million
- Evolving business service model and extended service offerings generate more opportunities
- Chenzhou city's first exhibition hall, the Chenzhou International Convention and Exhibition Centre (CZCEC) commenced full operations in mid-2014 and has successfully hosted several events
Financial Summary | For the 12 months ended 31 October (HK$'000) | ||
2014 | 2013 | Change | |
Turnover | 3,833,383 | 3,318,680 | +15.5% |
Gross profit | 1,139,390 | 1,033,088 | +10.3% |
Gross profit margin (%) | 29.7% | 31.1% | -1.4ppts |
Profit from operations | 296,806 | 278,933 | +6.4% |
Profit attributable to Owners of the Company | 240,494 | 211,129 | +13.9% |
Basic earnings per share | HK19.77 cents | HK17.37 cents | +13.8% |
Final dividend per share (recommended) | HK6 cents | HK5.5 cents | +9.1% |
Full year dividend | HK10.5 cents | HK10 cents | +5% |
(Hong Kong, 30 January 2015) Pico Far East Holdings Limited ("Pico", "the Company" or "the Group", HKEx: 00752), a leading global Total Brand Activation company, today announced its 2014 annual results for the 12 months ended 31 October 2014 (the "year").
During the second half of the financial year under review, all our business segments reported an increase in turnover compared to the first half. This enabled the Group to achieve an overall turnover of HK$3,833 million, representing an increase of 15.5% as compared to 2013 (2013: HK$3,319 million). The stronger performance seen in the second half was achieved, to some extent, through the implementation of the TBA business mindset into the acquisition of exhibition business.
Profit for the year attributable to owners of the Company was HK$240.5 million (2013: HK$211.1 million), representing a increase of 13.9%. Although the net profit margin after tax attributable to shareholders is near the 6.3% achieved in 2013, it would have been closer to 6.7% had we not made a provision of HK$17 million to write off a performance bond for the Commonwealth Games 2010 held in Delhi four years ago. Pico will continue to pursue the release of this performance bond through arbitration. Earnings per share is HK19.77 cents compared to HK17.37 cents in 2013. The Group maintained a healthy financial position, as reflected by the Group's net cash balance of HK$842 million (2013: HK$866 million)
The Board of Directors recommended a final dividend of HK6 cents per ordinary share. Altogether, the full year dividend is HK10.5 cents per ordinary share, representing 53.1% of the earnings per share.
Mr. Lawrence Chia, Chairman of Pico, said, "We are delighted about the significant increase in turnover in the second half of 2014. This year, we have made notable breakthroughs by offering a wider spectrum of services like digital marketing and sponsorship activation. We will continue to invest in our people to ensure that the skills of our different specialised teams can meet the ever-changing demands of our different business segments."
Looking ahead, China is and will continue to be a major factor in driving Pico's overall business which is expected to be challenging especially in certain segments like Brand Signage and Visual Identity. However, with our emphasis on TBA and introduction of Pico Plus, we are confident that we will continue to achieve significant growth to our bottom line in year to come.
Business Review
Turnover by segment | For the 12 months ended 31 October | ||||
2014 | 2013 | Change in turnover | |||
HK$' Million | % to Group's Turnover | HK$' Million | % to Group's Turnover | ||
Exhibition and Event Marketing Services | 2,762 | 72.1% | 2,465 | 74.3% | +12.0% |
Brand Signage & Visual Identity | 476 | 12.4% | 533 | 16.1% | -10.7% |
Museum, Themed Environment, Interior & Retail | 471 | 12.3% | 232 | 7.0% | +103.0% |
Conference and Show Management | 124 | 3.2% | 89 | 2.7% | +39.3% |
Exhibition and Event Marketing Services
Earlier in the year, the Group successfully completed another milestone: supplying temporary overlays for the "Coastal Cluster" at the 2014 Winter Olympic Games in Sochi, Russia, further strengthening our sport mega-event portfolio. In addition to supplying overlays to other sporting events like the HSBC Women's Champions in Singapore, the Group was involved in several events for organisers and sponsors in Rio de Janeiro during the 2014 FIFA World Cup in Brazil. As the official overlay partner of the World Club 10s Rugby tournament, we helped activate the first-ever event at the 35-hectare Singapore Sports Hub, a brand-new integrated sports and entertainment venue which opened in mid-2014. Furthermore, Pico recently won contracts for the Cycling and Triathlon venues at the first European Games to be held in June, 2015 in Azerbaijan's capital city Baku.
In Singapore, the Group was once again appointed to handle the Singapore National Day Parade 2014 which it started its first National Day project since the 1990s. The second year of the Group's renewed five-year contract with the Formula One Singapore Grand Prix saw the successful delivery of grandstands and premier seating, corporate and team hospitality suites, and garage fit-out for the night race.
Apart from actively providing TBA services to major car brands like Audi, BMW and Mercedes-Benz at their own product launch events and multi-city road shows in China and other regions, Pico was also involved in activating their strategic and high-profile participation in tier-one level international car shows in Beijing, Geneva and Paris. This year, the range of services Pico provided to these long-standing clients was extensive and innovative. Among others, for Thai Airways' launch of their Boeing Dreamliner service, we produced a talk-of-the-town event which generated vast media coverage and an engaging bonding activity involving hundreds of pilots and cabin crew.
The Group has won an impressive contract at the upcoming 2015 Milano Expo for the 2,000 square metre Malaysia pavilion, providing a full range of expo activation services including conceptual design, content development and event management. In addition, we have been awarded contracts to design and construct the Cambodia pavilion and participate in the construction of the structure of the Argentina pavilion. We are redoubling our efforts to secure further contracts as the Expo dates near. The Group has also begun marketing efforts for Expo 2017 to be held in Astana, Kazakhstan. This is a specialised world exposition focusing on future energy. More than 100 countries and 10 international organisations are expected to participate.
Brand Signage and Visual Identity
During the year under review, the automobile segment remained key business driver of the Group as Pico continued to provide brand signage and visual identity solutions for Cadillac, Chang An, Chevy, Dongfeng Peugeot, Guangzhou Automobile Group, Infiniti, Jaguar Land Rover, Lexus, Lincoln, Mercedes-Benz, Nissan, Renault and Shanghai General Motors throughout our China-wide network; and also for Jaguar Land Rover, Infiniti and Rolls-Royce on a global basis.
In Shanghai, Pico has also been selected to supply several graphics and signage packages for Shanghai Disneyland, with the project expected to be completed in 2015. Also in China, Pico continued to offer signage solutions to major fast food chains like Yonghe Dawang, Dairy Queen and Saizeriya; and to the Agricultural Bank of China and Citibank China in the banking sector. In addition, we provided design and build services to major hotel brands like Accor Group, IHG and Hilton in China. We also started a new contract with Wuxi Intel IKEA for the provision of signage. The strength of our success won the Group another contract with Wuhan Intel IKEA which will run through 2015.
Museum, Themed Environment, Interior and Retail
Recently, increased investment by our clients provided a major boost, putting this segment back in alignment with performance of the rest of the Group.
While many spectacular projects currently in progress like Shanghai Disneyland will run through 2015, the Group has won a number of other equally impressive projects from the 2014 financial year. The Group has now begun conceptual design work for the Wanda Movie Theme Park in Nanchang and will continue to provide conceptual design and fabrication services for other theatres and game zones in Nanchang and Qingdao. In addition, Pico is also providing conceptual design services to another theme park in Wuxi. These projects will be completed in phases throughout the 2015 and 2016 financial years.
In Wuhan, the Group is continuing to provide its expertise for the creation of the International Garden and Arts Centre and the Yangtze River Civilisation Museum. Elsewhere in Asia, the Group has been appointed to create the National Gallery of Singapore by mid-2015. The Group has also been engaged to handle the regional rollout of Lenovo in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam, and Midea showrooms in Cambodia, Indonesia, Myanmar, the Philippines and Vietnam.
Conference and Show Management
During the year, the Group continues to provide a number of recurring and some new projects in this segment. In particular, Pico is the co-owner of the International Furniture Fair Singapore, with which it has achieved resounding and lasting success. The Group also co-organised the Asia edition of the European-based ITMA, known as ITMA Asia, with the China based CITME in China, and the latest textile machinery show held in Shanghai in 2014 was reported as the most successful and largest to date. In November 2015, Pico will also manage the ITMA 2015 textile machinery show in Milan shortly after the close of Expo Milano 2015 in October. The Group is committed to matching and exceeding its success at ITMA 2011 in Barcelona.
The Group continued to explore opportunities in new areas. Recently, the Group was appointed to event manage the biennial INTERPOL World series, with the next show to be held in Singapore in April 2015. The Group has just completed the ASEAN Tourism Forum held in Naypidaw, Myanmar this month.
Geographical Review
Turnover by Region | For the 12 months ended 31 October | |||
2014 | 2013 | |||
(HK$' Million) | % to Group's Turnover | (HK$' Million) | % to Group's Turnover | |
Greater China | 2,282 | 59.5% | 2,062 | 62.2% |
South Asia | 1,024 | 26.7% | 806 | 24.3% |
Middle East | 150 | 3.9% | 204 | 6.1% |
Others: Europe, North America, Russia, Japan and Korea | 377 | 9.9% | 246 | 7.4% |
Geographically, Greater China − including Hong Kong, Macau, Taiwan and the PRC − accounted for 59.5% (2013: 62.2%) of the total turnover of HK$3,833 million (2013: HK$3,319 million). South Asia (Singapore, Malaysia, Vietnam, the Philippines and India) accounted for 26.7% (2013: 24.3%), and the Middle East accounted for 3.9% (2013: 6.1%). The remaining 9.9% (2013: 7.4%) was mainly derived from Europe, North America, Russia, Japan and Korea.
In terms of volume, the business did not see any significant shift to any particular region in 2014, with Greater China remaining the Pico's largest region and contributing the most revenue to the Group.
Prospects
Globally, the OECD expects that world trade growth will pick up slightly in 2015 and 2016. Against this backdrop, trade intensity will return to growth after the stagnation of recent years. We believe that this growth will underpin more sales and marketing activities around the world which will have positive effects on the trade show industry.
More recently, the sharp drop in oil prices will increase personal disposable income, and we believe that increased consumer spending power will encourage growth in consumers-driven trade shows. The reported growth in the U.S. economy will also bring optimism to world trade just as the sentiment after the global financial crisis which began in the U.S. in 2008 brought general pessimism to consumers worldwide. Thus the outlook for our industry, which is dependent on world trade and consumption, is more positive than it was during the last few years.
At the business operations level, the Group will continue to renew and upgrade our service offerings so as to adjust to the evolving demand side of our business. This will require alternative marketing methods where we will invest in digital media technology. This technology can also be applied to meet the sophisticated needs of museums, theme parks, world expos and major sporting events.
About Pico Far East Holdings Limited (HKEx: 00752.HK)
Pico is a leading Total Brand Activation company with a worldwide presence and a proven track record nearly half a century long. Leveraging on an international network of more than 2,000 staff in nearly 40 major cities around the globe, we bring brands to life through powerful and engaging experiences across multiple activation platforms - from exhibitions, events and world expos; museums, themed environments, interior and retail environments to visual identity solutions, sport marketing and overlays, as well as venue management and consultation. Pico was voted "Best Event Agency" in CEI Asia magazine's 2015 CEI Industry Excellence in Business Events survey in January 2015 and was ranked in the top three in America's Special Events Magazine's 50 Top Event Companies listings in 2012-2014.
Pico Far East Holdings Limited has been listed on the Stock Exchange of Hong Kong since 1992 (HKEx Stock Code: 752). Our associate company, Pico (Thailand) Public Company Limited was also listed on Thailand's MAI in 2004 (Stock Code: PICO).
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