24-06-13 - Louis XIII Limited Announces 2012/2013 Annual Results
Louis XIII Holdings Limited (“the Company”; stock code 0577.HK) today announced the consolidated results of the Company and its subsidiaries (collectively “the Group”) for the year ended 31 March 2013. The Company was formerly known as Paul Y. Engineering Group Limited, and is engaged in engineering and construction services as well as hotel development.
For the year ended 31 March 2013, the Group recorded a consolidated turnover of approximately HK$6,820 million (2012: HK$4,304 million), representing an increase of approximately 58% from last year as a result of the strong order book in hand. Taking into account the Company’s share of turnover of associates and jointly controlled entities, turnover is approximately HK$7,781 million (2012: HK$4,714 million), representing an increase of approximately 65%. Gross Profit increased by approximately 7% to HK$199 million (2012: HK$187 million). However, due to a rise in manpower and other construction costs, the Group’s gross margin dropped slightly to 2.9% (2012: 4.3%). Profit attributable to owners of the Company for the year was approximately HK$18 million (2012: HK$30 million). Basic earnings per share was 16.8 HK cents.
During the period under review, the Group maintained a strong financial position with total assets increasing by approximately 91% to HK$6,352 million. Net cash flow used in operating activities was approximately HK$4 million and net cash inflow in respect of investing and financing activities was approximately HK$859 million, resulting in a net increase in cash and cash equivalents of approximately HK$855 million for the year.
In February 2013, the Company raised gross proceeds of HK$1,998 million through an equity offering and HK$1,202 million from the placement of convertible bonds. The total gross proceeds of $3,200 million from these placings will be used primarily to fund the development of an ultra-luxury hotel and entertainment property in Macau.
In March, 2013, the Company completed its distribution in specie to existing shareholders of the Company of 49% of the shares of its wholly-owned subsidiary, Paul Y. Engineering Group Limited (formerly known as Paul Y. Engineering (BVI) Limited) (“PYE”), which continues to hold substantially all of the Group’s businesses other than the hotel operations. The Company retains a 51% interest in PYE.
The Company does not propose to pay a dividend for the year ended 31 March 2013 as profits will be retained to fund capital expenditures and pre-opening expenses related to the Macau hotel development project.
ENGINEERING AND CONSTRUCTION
During the year ended 31 March 2013, the demand for engineering and construction services remained strong in both Hong Kong and Macau, with the Group’s Management Contracting division successfully securing new contracts of approximately HK$13,222 million during the financial year, representing an increase of approximately 49% as compared to HK$8,891 million in the prior year.
The Management Contracting division remained the major contributor of revenue this year. Turnover of this division amounted to HK$6,813 million (2012: HK$4,268 million), an increase of approximately 60%. Taking into account the Company’s share of turnover of associates and jointly controlled entities, turnover is approximately HK$7,770 million (2012: HK$4,663 million), representing an increase of approximately 67%. Operating profit increased by approximately 17% to HK$118 million (2012: HK$101 million). As at 31 March 2013, the value of contracts on hand was approximately HK$23,503 million (2012: HK$15,102 million), while the value of work remaining was approximately HK$16,755 million.
The Property Development Management division reported a profit of approximately HK$2 million for the year under review. The value of contracts on hand for the Property Development Management division at the year-end was approximately HK$3 million.
The Property Investment division also reported a profit, through its jointly controlled entity/associate of approximately HK$8 million for the year under review. The jointly controlled entity/associate holds an investment property in Hangzhou, the Pioneer Technology Building, an office building with gross floor area of some 20,000 square meters. The building contributed rental income of about HK$11 million (2012: HK$10 million) and was almost fully occupied as at 31 March 2013.
During the 2012/2013 financial year, the Company acquired Falloncroft Investments Limited (“Falloncroft”) for HK$2,000 million. Through this transaction, the Company acquired exclusive contractual rights to develop a 65,000 sq. ft. parcel of land on the Cotai Strip in Macau on which it proposes to build an exclusive luxury hotel and entertainment destination. This project, which is the first to be undertaken by the Group’s newly formed hotel development division, is expected to be completed in early 2016.
Once fully operational, the property will have a total area of approximately 945,000 square feet, and will include approximately 230 hotel suites combined with exclusive retail, fine dining and entertainment options for guests. The guest suites of the hotel will consist of standard suites each occupying an area of approximately 2,000 square feet in a duplex configuration, fifteen approximately 5,000 square foot villas and a 20,000 square foot Royal Villa. The project will also house a by-invitation-only Atelier, which will offer clients the opportunity to privately view some of the finest, bespoke and limited edition couture pieces from some of the most prestigious international luxury brands in the world, such as Graff Diamonds. In addition, the Group has partnered with the Michelin 3-star L’Ambroisie in Paris to open its only other restaurant in the world in the property. Subject to government approval, the property will also have a casino.
For the year ended 31 March 2013, the Group’s hotel development division recorded HK$2,048 million assets and HK$179 million liabilities, which mainly represents the cost of the land, the cost of developing the property and the liability portion of the convertible bonds issued for the Falloncroft acquisition. There was no segment profit from the hotel development division for the year ended 31 March 2013.
Commenting on the results, Mr. Stephen Hung, Joint Chairman of Louis XIII Holdings Limited, said, “We are pleased to report that our engineering and construction business had another year of good performance and the Group continues to maintain a healthy financial position. This has been an exciting year for us as we diversified into hotel development and re-branded the Group to better reflect our new business focus. In April 2013 we broke ground on our property on the Cotai Strip in Macau. Our aim is to bring together a unique collection of exclusive, luxury experiences, and are confident that, once completed, the property will contribute to maximising value for the Company’s shareholders.”
Mr. Peter Coker, Joint Chairman of Louis XIII Holdings Limited added, “The Group’s results are as we expected; turnover, due to our construction business, increased strongly but profit for the year fell as we increased our spending on our major development project in Macau. That being said, we are very excited about the Macau project; the Macau market remains strong and Louis XIII will fill a unique niche, attracting further visitors and bringing new employment opportunities to the city.”
Looking ahead to 2013, the Group will continue to focus its resources on profitable opportunities in Hong Kong. The growth in the volume of construction activity in Hong Kong is expected to continue as the HKSAR Government has committed to maintain capital works expenditures of over HK$70 billion for each of the next few years and to increase land supply for both residential and commercial uses. As one of the leading management contracting companies in Hong Kong, the Group is well-positioned to benefit from this expected continued growth in construction.
Outside of Hong Kong, the Group will continue to expand its services in Macau, where economic growth is expected to continue at a robust pace in 2013. The Group anticipates strong demand for construction services in Macau, particularly as several large integrated resort developments have announced plans to launch in the territory within the next two years. The Group will also continue to focus its resources on developing and constructing its hotel and entertainment property on Macau’s Cotai Strip.
Finally, the Group also intends to continue its expansion into the Singapore market as construction activities there are expected to grow steadily. Having already established a strong track record in this market, the Group is confident of securing more contracts in Singapore in the coming years.