Luxury watch retailer Sincere Watch yesterday reported a 5.3 per cent year-on-year slip in its fourth-quarter net profit to $9.05 million despite a 10.38 per cent rise in revenue to $91.8 million.

For the full year ended March 31, however, the company achieved record net profit of $34.1 million, up 78 per cent from $19.1 million, despite a 1.9 per cent dip in revenue to $318.2 million.

Full-year earnings per share nearly doubled to 17.36 cents from 9.75 cents in the previous financial year, while its net asset value rose 62.02 cents from end-March 2005's 46.88 cents.

Sincere proposed a total gross dividend of 2.65 cents per share comprising a first and final dividend of one cent and a special dividend of 1.65 cents for the year.

It also said it 'will review the financial needs and performance of the company after the next six months with a view to recommending additional dividends for the purpose of discharging the Section 44 credit balance of about $5 million'. 'The group's cash position is healthy with cash and cash equivalents of $42.8 million,' said Sincere.

The surge in full-year profit was partly due to an exceptional gain of $10.6 million from the listing of Sincere's subsidiary in Hong Kong in October.

But even excluding this item, full-year before-tax profit still rose 33.8 per cent to $31.7 million, it said. Profit before tax for the fourth quarter increased 16.4 per cent to $13.1 million.

The main reason for this was the strong demand for Sincere's distribution and exclusive retail brands particularly in the fourth quarter, said Soh Gim Teik, Sincere's finance director.

'So taken as a whole, gross margin rose as a result of improved sales mix. So we had increased profits despite the slight dip in turnover,' said Mr Soh.

He attributed the revenue drop to deferred purchasing by dealers in Hong Kong as a result of the weakening of the Swiss franc and euro against the local currency in the first half of the financial year.

Sincere remains very optimistic about its business prospects in Singapore and the region. 'We will like to have, hopefully, double-digit growth but we cannot say for sure that we will achieve it,' said Mr Soh.

Tay Liam Wee, Sincere's group managing director, told BT: 'I think we are sitting in a very exciting part of the world - Asia where the luxury business is definitely growing and the watch category is becoming a very important subset of this luxury universe.

'In addition, integrated resorts (IRs) are being developed in Macau and Singapore which will bring in all the high net worth individuals whom we hope to capture as our customers.

'There is also of course the China factor: The rising demand of Chinese consumers for luxury watches. All these factors will be driving growth, ' said Mr Tay. In Singapore, Sincere is hoping to leverage on the draw of the two IRs by opening shops in or near the IRs.

The company also announced yesterday that it is opening the world's first Watch Academy in Singapore at the end of the year.

By Nande Khin