To Distribute Special Dividend by Spin-off Listing of Emperor Capital Group
HONG KONG, July 20 /Xinhua-PRNewswire-FirstCall/ -- Emperor International Holdings Limited (Hong Kong Stock code: 163; ADR: EPRRY) and Emperor Entertainment Hotel Limited (Stock code: 296) announced their final results for the 12 months ended March 31 2006 ("Review Period").
Highlights
Emperor International Holdings Limited
-- Profit rose 34.2% from last year to HK$532.4 million
-- All business segments recorded growth or turnaround
-- Final dividend of 5.1 HK cents (Total Dividend of 10.1 HK cents)
-- To distribute special dividend in the form of free shares of Emperor
Capital Group via spin-off listing
Emperor Entertainment Hotel Limited
-- The Grand Emperor Hotel commenced business in January 2006
-- Profit totalled HK$166.8 million
-- Final dividend of 2 HK cents
(Total Dividend of 3 HK cents)
-- Room to grow to reach full capacity
Emperor International Holdings Limited ("the Group" or "EIH")
For the 12 months ended March 31, 2006, EIH recorded turnover of HK$985.5 million (2005: HK$1.1 billion). Profit attributable to shareholders surged 34.2% year-on-year to reach HK$532.4 million (2005: HK$396.8 million).
Ms Vanessa Fan, Managing Director of the Group, said: "We are delighted to report the encouraging results during the Review Period. This was mainly due to increased rental income as well as gains from the revaluation of our existing investment properties and development projects. All business segments reported a profit surge or turnaround. EIH also received for the first time a significant contribution from associate Emperor Entertainment Hotel Limited."
Earning per share amounted to 47 HK cents (2005: 45 HK cents). The Group has proposed distributing a final dividend of 5.1 HK cents. Together with the 5 HK cents interim dividend, total dividend will reach 10.1 HK cents (2005: 10.1 HK cents).
To focus more closely on the core property and hotel businesses, EIH has proposed spinning-off and listing separately Emperor Capital Group (ECG), which primarily engages in brokerage, securities and financial services. Upon listing ECG on the Main Board, The Group plans to distribute shares of ECG to existing EIH shareholders. The separate listing is subject to approval by the Listing Committee, the EIH board and shareholders and the ECG board of directors.
"The distribution of ECG shares will be a special dividend to EIH shareholders," Ms Fan said. "It also shows our determination and efforts to restructure our business portfolio to focus more on property development and investment -- areas in which we possess execution strength and higher margins."
Property Development and Investment
This business segment accounted for 80% of the Group's total contributions.
As the Hong Kong market continued to improve in the Review Period, the Group's property-related operations have seen income growing steadily. Turnover from the leasing of investment properties rose 24.6% to approximately HK$130.5 million (2005: HK$104.7 million), while profit climbed 32.6% to approximately HK$597.2 million (2005: HK$450.4 million).
The Group maintained a high overall occupancy rate for its retail properties, due to the prime locations of the majority of these properties.
The total carrying value of the Group's property portfolio in Hong Kong, Macau and mainland China reached approximately HK$4.6 billion. These properties include shops, offices, apartments, industrial buildings and a hotel. During the period, the Group did not have any substantial sales of properties.
Amid a recovering property market in Hong Kong, the Group reported a revaluation gain of HK$471.9 million from investment properties and its Repulse Bay project, which is under development. Profits from lease of properties excluding the revaluation gain were HK$122.5 million, compared with HK$90.2 million in 2005.
In general, the Group made positive and active progress in property development. In April 2006, the Group announced the acquisition of a piece of land in Beijing for the construction of a high-end shopping and office complex. The 88,420 square feet site commands prime frontage along Chang'an Avenue, a famous tourist, shopping and office district between the second and third rings of Beijing. The Group plans to build on the site a comprehensive commercial complex with a gross floor area of approximately 816,000 square feet. It will consist of a retail podium with high-end and luxury shops, restaurants, entertainment hot spots and car-park facilities, with a Grade-A office tower above. The investment represents the Group's expansion towards Beijing and China property market.
In Hong Kong, the Group completed the basement excavation and foundation work for the redevelopment at Repulse Bay. The site is for the development of a 151,000 square feet multifunctional recreation complex, which should generate long-term rental income. The project is expected to be completed in 2008.
Hotel
The Group experienced a turnaround for the Emperor (Happy Valley) Hotel during the year. Turnover for the hotel was approximately HK$63.3 million (2005: HK$51.9 million), with revenue mainly coming from the hotel's 150 guest rooms, karaoke lounge and coffee shop. The hotel enjoyed a profit of HK$4.1 million, against a loss of HK$5.3 million in the previous corresponding period.
The hotel achieved an improvement in room rates and occupancy, which reached approximately 94% on average.
Securities Brokerage and Financial Services Turnover from this segment climbed 23.5% to HK$127.6 million (2005: HK$103.3 million). The result was boosted by the expansion of the commodity futures business in the region and the increase in the number of initial public offering in Hong Kong. Profit rose by 10% to HK$78.9 million (2005: HK$71.1 million).
The proposed spin-off and separate listing of ECG will enable EIH to be more focused on its core business of property investment and development. It will also enable EIH to realise its investment in the ECG. Furthermore, ECG can establish its own shareholder base and directly raise funds in the capital markets for its existing operations and future expansion, on an independent basis according to its own business plans. Such a listing will also increase the transparency of its business performance and provide timely information to the market and investors.
Non-core businesses disposed/discontinued
On March 31, 2006, the Group completed the disposal of non-core businesses, in a bid to focus on major, more profitable operations. Those businesses included wholesaling and retailing of furniture, publishing and printing operations, and restaurant operations.
The non-core businesses contributed a total turnover of HK$659.9 million in the period (2005: HK$745.4 million), and a marginal profit of HK$2.5 million compared with a loss of HK$11.5 million previously. The disposal and discontinuation have generated capital resources of more than HK$100 million to the Group, leaving the Group to focus management efforts on its major and higher profit margin businesses.
Contributions from associate
The Group received a contribution of HK$57.9 million from its 35%-owned associate Emperor Entertainment Hotel Limited ("EEH"). The Macau hotel commenced business in January 2006 and it brings in contributions as well as cash dividends to parent EIH.
Mr Donald Cheung, Property Director of the Group, commented: "We are pleased that the Group has now entered a new stage. We will focus on our core business -- property development and investment as well as hotel operations. We will have strong cash-flow from rental income and through dividends from EEH."
Emperor Entertainment Hotel Limited ("EEH")
The Period is the first time the Group incorporated a full-scale gaming and entertainment operation in its financial result. The Group's cruise vessel "Golden Princess" made a fair contribution to the earnings of the Group, while the flagship project Grand Emperor Hotel in the Macau Special Administrative Region made a solid debut and contributed cash-flow following commencement of operations in January 2006.
Turnover for the Group was HK$345.8 million during the Review Period (2005: HK$18.2 million), while net profit was HK$166.8 million (2005: HK$17.6 million). The construction of the Group's property development project -- a shopping arcade and serviced apartment complex in Shanghai, PRC -- is proceeding as planned and is expected to be completed in 2008.
Golden Princess Cruise Liner
The Group received turnover of HK$137.9 million and profit of HK$49.4 million from its cruise-related operations during the Review Period. "Golden Princess" was acquired in February 2005 from the Company's substantial shareholder. The cruise liner provides entertainment, gaming and accommodation to a maximum of 570 guests.
Macau Gaming Hotel Project
The Grand Emperor Hotel in Macau is the flagship of this segment. To get in early in the fast growing and lucrative market, the Group chose to acquire an existing building and convert it into a gaming hotel. The hotel officially commenced business in January 2006, following a renovation that lasted a short 12 months. It was the first new hotel to launch in Macau in 2006.
The Grand Emperor Hotel is located at the heart of Macau's city centre, a short distance from the main ferry terminal and casino landmark Hotel Lisboa. Targeting medium to high rollers, the Grand Emperor Hotel presently has 333 slot machine seats and 44 gaming tables in gaming concourses and VIP rooms featuring mainly baccarat -- the most popular game in Macau with the best odds among major table games. Anticipated table capacity is 86 across the gaming concourses and VIP rooms. The luxuriously designed hotel also provides comprehensive entertainment and dining facilities with a European-themed decor. It has 291 hotel rooms.
The Group owns 45% of the project. With management control vesting in the Group and other stakeholders remaining passive investors, the project's financials are consolidated into the Group's financial statements in order to provide transparency for the market and investors.
Gaming Revenue
Given the fact that the casino has been in operation for approximately three months during the Review Period, the Group was satisfied with the casino operations, the performance of which was in line with management expectations. All segments picked up quickly after the period and expenses stabilised after the hotel's opening. The management expected further advancement when the hotel operates at a full capacity of 64 gaming tables and eight VIP halls.
Gaming Concourse
During the period under review, the Group had 44 tables operating in the mass market-targeted concourse, contributing a gross win of HK$87.5 million. Income was HK$35.0 million since the hotel soft launched in early January 2006. The 44 tables returned an average win of approximately HK$23,000 per table per day.
Slots
Slot machines contributed turnover of HK$19.7 million during the Review Period. The 333 seats had an average win of approximately HK$700 per day. Income was HK$6.1 million.
VIP room - Self-operated
The Group has been running one of the six VIP rooms operating within the hotel since the hotel opened in January 2006. The six tables -- all offer baccarat -- recorded a rolling of HK$11.1 billion and an income of HK$117.5 million. Win percentage (calculated before discounts and commissions) was 2.7%. Average win per table per day was HK$579,000.
Other VIP rooms
The Group received income from five of the six VIP rooms operating within the hotel. Contribution was HK$7.8 million during the period under review.
Non-Gaming Revenue
The Grand Emperor Hotel recorded non-gaming revenue of HK$24.7 million, comprising mainly contributions from hotel rooms, food and beverage, as well as rentals from sauna, night club and retail outlets on the ground floor of the hotel.
The hotel rooms had an average daily rate of approximately HK$800 during the Review Period. Occupancy of the available guestrooms was 64%. As a result of active marketing and promotions, occupancy experienced a fast upward trend, reaching an average of above 80% in the months after the reporting period.
Income from food & beverage was HK$8.6 million. Rental from sauna, night club and retail outlets was HK$3.0 million.
Property Sales and Development
This segment recorded a loss of HK$2.6 million.
The property development project -- to be developed into a retail development in Yu Yuan, Shanghai -- was in the investment stage during the reporting period. The Group plans to build on the 22,870 square meter site a commercial complex. The Group envisages lucrative returns from the project, in which it contributed only the land, with construction being undertaken by its local partner which shared a 50:50 spilt and potential market risk was covered by a put option.
The main body of the project will be a multi-storey shopping arcade, and the entire project is expected to have area of more than 110,000 square metres. During the Review Period, the project completed piling foundation work and basement excavation commenced in June 2006. The Project will complete construction in 2008.
Ms. Vanessa Fan, Executive Director of the EEH, said: "With the opening of the Grand Emperor Hotel in Macau in January this year, the Group has repositioned itself as a full-scale gaming operation enjoying significant contributions from gaming."
The Group saw both casino and hotel operations improving after the reporting period and expects further advancement in future. It also anticipates increasing contributions from the gaming arm, with the inclusion of additional slot machines and when the hotel operates at a full capacity of 64 gaming tables in the mass market-targeted concourse, following the increased supply of dealers from SJM, the gaming concessionaire and a passive investor in the hotel project.
"Looking ahead, the Group will not settle for a single project in the lucrative Macau market. Instead, it is actively looking for expansion possibilities with further utilisation of the Group's execution strength and rich assets in the entertainment industry," Ms Fan said. "Meanwhile, the Group will continue to explore potential business opportunities elsewhere to maximise shareholder return."
About Emperor International Holdings
Emperor International Holdings Limited is an investment holding company, which is principally engaged in property development and investment business. Its subsidiaries are also engaged in hotel and financial and brokerage services operations.
About Emperor Entertainment Hotel Limited
Emperor Entertainment Hotel Limited is the gaming business platform of its parent company Emperor International Holdings Limited (Hong Kong Stock Code: 163; ADR: EPRRY). The company owns the Golden Princess, a casino cruise liner with a capacity of 570 guests. EEH has a hotel in Macau, offering VIP gaming and entertainment services, food and beverage as well as retail outlets. The company has also reactivated a development project for a prime shopping arcade in Shanghai and continues to look for potential business opportunities worldwide.
For Enquiries:
Emperor Group
Sidney Luk
Tel: +852-2835-6715
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