Tuesday, April 13, 2021
 
Columnist
Martin Hennecke
 
CITY E-SOLUTION
HKEx Stock Code : 00557 
 
Corporate Profile
The principal activities comprise those of investment holding and the provision of consultancy services.

Business Review - For the year ended December 31, 2012

The Group reported an improvement in revenue in financial year 2012 (ˇ§FY2012ˇ¨) to HK$135.1 million, an increase of HK$25.8 million or 23.6% from HK$109.3 million in the previous corresponding year due mainly to higher dividend and interest income and the additional revenue contribution from the acquisitions by the Group's Hospitality segment. However, the Group's Hospitality segment reported higher pre-tax loss of HK$8.7 million in FY2012 as compared with a pre-tax loss of HK$2.1 million in the previous corresponding year which can be attributed mainly to higher interest expense, depreciation and amortisation as well as the consolidation of operating and acquisition-related expenses of the new subsidiary in FY2012.

For the year ended 31 December 2012, the Group recorded a net realised and unrealised translation exchange gain of HK$3.6 million mainly from the Sterling Pound denominated trading security and cash deposit. Further, an unrealised valuation gain of HK$12.7 million was recorded from the Group's securities holding as at 31 December 2012. Overall, a total net realised and unrealised gains of HK$16.3 million was recorded for the year under review as compared with a total net realised and unrealised loss of HK$32.0 million reported in the previous corresponding year. In addition, higher dividend and interest income amounting to HK$7.5 million were recorded in FY2012, up by HK$3.5 million, as compared with HK$4.0 million in the previous corresponding year.

Consequently, the Group recorded a net profit attributable to the equity shareholders of the Company of HK$7.1 million as compared with a net loss attributable to the equity shareholders of the Company of HK$31.2 million in the previous corresponding year due mainly to the unrealised valuation gains from the Group's securities holding as at 31 December 2012.

On 27 February 2012, the Group successfully completed the acquisition of Whiteboard Labs, LLC (WBL) and merged it with the Group's in-house reservations management and electronic distribution arm, Sceptre Hospitality, to create a new subsidiary named Sceptre Hospitality Resources (SHR), in which the Group holds a 51% equity interest. SHR contributed additional revenue of HK$29.1 million to the Group's revenue for the year under review. However, an operating loss of HK$7.6 million was recorded due mainly to an amount of HK$2.7 million and HK$2.4 million for acquisition-related expense and depreciation and amortisation charges which were incurred respectively during the year. WBL provides the Group with various important components of hotel reservation technology, including a proprietary, technologically-advanced Central Reservations System (CRS) platform that is currently used by over 5,000 hotels. This CRS platform will become an integral component of the Group's Hospitality segment and paves the way for additional sources of income and growth opportunities.

The Group's jointly-controlled entities (JCE) which own the two hotels in the U.S. contributed a total revenue of HK$63.6 million to the Group's revenue, an increase of HK$9.4 million or 17.3%, from HK$54.2 million in the previous corresponding year due to the full year proportionate consolidation in FY2012 as compared with the partial proportionate consolidation since the acquisition of the Sheraton Chapel Hill Hotel by the JCE was only completed on 22 March 2011. The proportionate pre-tax profit from these 2 hotels amounted to HK$1.6 million as compared with a proportionate total pre-tax losses of HK$4.6 million in the previous corresponding year due partly to the write off of the acquisition-related expense.

Basic earnings per share for the year under review was HK1.85 cents calculated on the weighted average number of 382,449,524 ordinary shares in issue during the year. The Group's Net Tangible Assets per share decreased to HK$1.37 as at 31 December 2012, down from HK$1.41 as at 31 December 2011. The Board is not proposing a final dividend for the year under review.

Business Outlook - For the year ended December 31, 2012

The Group remains cautious in the midst of the global uncertainty, though there are signs of improvement in the U.S. real estate and hospitality market.

The Group continues to hold some trading securities while its cash reserves are in a basket of currencies. From time to time, there could be continued adjustments attributable to unrealised gains or losses arising from the fair value readjustments of the Group's trading securities and unrealised gains or losses on the revaluation of foreign currency cash deposits.

The Group will continue to stay on the look out for investments that meet its criteria.

Source: City e-Solutions (00557) Annual Results Announcement
Chairman Kwek Leng Beng Issued Capital (shares) 382M
Par Value HKD 1 Market Capitalisation (HKD) 272M
 
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