Jewellery and watch distributor Egana International has revealed plans to expand into luxury leather goods distribution in Europe using part of the proceeds from its $462 million rights issue. Egana International (Holdings) yesterday reported a first-half net profit of $68.3 million, an increase of only 0.6 per cent over the same period last year. The company blamed Asia's recession for the flat results and said the diversification into leather goods was in direct response to the region's troubles and because Egana's core businesses had matured. Director David Wong Wai-kwong said: 'We hope to diversify into leather goods the same way as we have done with jewellery.' Recently spun-off sister company Egana Jewellery & Pearls, which is 52 per cent held by Egana International, said attributable profit for the six months was unchanged at $30.2 million. However, financial controller Peter Law said the group's profit figures were more encouraging if compared with the second half of last year. Egana International's attributable was up 46 per cent over that period while Egana Jewellery's rose 59 per cent. Mr Law said Egana International would book a $50 million exceptional gain in the second half from the spin-off of Egana Jewellery. Sales were also 'encouragingly on the increase', Egana director Peter Lee Ka-yue said. Egana International's first-half turnover was $655.6 million, while Egana Jewellery's turnover was $181.5 million. The group had combined sales of $674.5 million for the same period last year. Earnings were 2.11 cents per share at Egana International and one cent per share at Egana Jewellery. The two companies will pay an interim dividend of 0.2 cent and 0.48 cent, against a combined interim dividend of one cent per share last year. Mr Wong said a refundable down payment had been made towards the acquisition of a German leather-goods distributor, probably costing about $200 million.