Convenience
Retail Asia maintains satisfactory turnover and
profit growth for 2002
First
Circle K stores in Guangzhou draw favourable responses
Hong Kong,
14 March 2003 - Convenience Retail Asia Limited ("CRA"
or "the Group"; HKEx: 8052), operator of the Circle K convenience
store in Hong Kong and the Chinese Mainland, announced satisfactory
growth in turnover and profit for 2002 despite a very difficult economic
environment in Hong Kong. The Group achieved a continuous record of
growth quarter on quarter since the Group's GEM listing in January
2001.
The Group's turnover
for the year and the fourth quarter ended 31 December 2002 rose 6.8%
and 10.6% to HK$1.4 billion and HK$360.8 million respectively, compared
to corresponding periods in 2001.
Net profit attributable
to shareholders increased by 10.2% to HK$72.1 million for the year
and by 23% to HK$19.6 million for the fourth quarter. Basic earnings
per share increased by 7.9% to 10.9 cents for the year.
Dr. Victor K.
Fung, Chairman of CRA, commented on the Group's performance, "2002
was an eventful year for the Group. It was by no means an easy task
to achieve the growth last year, in the face of continued deflationary
pressure and weak consumer sentiment. In fact, it was further testimony
to our robust business model, which seems able to weather market turmoil."
Mr. Richard Yeung,
Chief Executive Officer of CRA, added, "Our success in 2002 was
largely due to continual improvements in the Group's core competencies
and the building of a strong brand image. We will persist with this
strategy in order to sustain profitability and achieve volume growth
in an uncertain market environment."
Business Review
For the year under
review, the increase in turnover came primarily from sales of new
stores. 22 new stores were opened during the year, giving a total
of 166 outlets by year-end and missing the Group's target of 170 by
four stores. A 4.3% decline in sales of comparable stores (stores
that are in existence in 2001 and 2002) was recorded.
Continual improvements
in category management and income from new categories such as phone
cards resulted in increase in gross margin and other income (excluding
interest income) from 31.6% to 32.8% of sales for the year when compared
to 2001. The Group was also very intent on controlling expenses. As
a result, an increase in net margin from 5% to 5.2% of sales was recorded
for the year.
Update on the
Guangzhou Operation
In November 2002,
the first Circle K store in Guangzhou was opened marking the launch
of "the new generation of convenience store". The new store
model is specially designed for the Guangzhou market featuring an
innovative range of products. Customer response so far has been favourable
and sales figure is in line with expectation.
Following the
success of the first store, the Group opened the second Circle K store
in Guangzhou in end December. The Group will monitor the performance
of each store and fine-tune the business model before embarking on
an aggressive expansion plan.
Business Outlook
The outlook for
2003 is not a particularly optimistic one for Hong Kong as deflation
and high unemployment continue to deter economic recovery.
Looking ahead,
Mr. Yeung said, "We anticipate a slight decrease in the dollar
value of the overall retail market sales in Hong Kong compared with
2002, which will be more or less in line with the continual deflation
trend. Our key objectives for 2003 will be to maintain comparable
store sales, to reduce the cost of goods sold, to generate new source
of income with the introduction of new growth categories and to exercise
strict cost control."
"It will
be important for the Group to adhere to the quality growth strategy
with tactics to add value to the Circle K shopping experience. The
ultimate goal is to achieve and exceed our target volume and profitability
growth for both Hong Kong and Guangzhou operations," Mr. Yeung
concluded.
About CRA
Convenience Retail Asia Limited (CRA, HKEx stock code: 8052), a member
of Li & Fung Retailing Group, is engaged in the operation of one
of the leading convenience store chains in Hong Kong under the brand
name of Circle K. The Circle K store chain in Hong Kong comprises
166 company-owned-and-managed stores as of 31 December 2002.
In October
2002, CRA established Convenience Retail Southern China Limited in
joint venture with Guangzhou Grain Group Limited and Shanghai Shenhong
Corporation to develop the South China market. By the end of 2002,
two Circle K stores were in operation in Guangzhou.
CRA corporate
Web site: www.cr-asia.com
About Li
& Fung Retailing
Li & Fung (Retailing) Limited, the holding company of Convenience
Retail Asia, was formed in 1985 as a company wholly-owned by Li &
Fung (1937) Limited. There are two chains within the retailing group:
Circle K and Toys "R" Us. The retailing group's business
extends from Hong Kong to Taiwan, Singapore, and Malaysia, with plans
for expansion into the Mainland of China and other South East Asian
countries.
For media inquiry, please contact:
Convenience
Retail Asia Limited
|
Telephone:
|
2991 6000
|
Mrs. Louisa
Kwan
|
Direct line:
|
2991 6229
|
Convenience
Retail Asia Limited
Results
for 2002
|
Increase
|
2002 |
2001 |
|
Turnover |
7
% |
HK$1,393,542,000 |
HK$1,305,124,000 |
Profit attributable to shareholders |
10
% |
HK$72,117,000 |
HK$65,457,000 |
Basic earnings per share |
8 % |
10.9 HK cents |
10.1 HK cents |
|
-
Satisfactory
growth in turnover and profit despite the difficult economic environment
in Hong Kong.
-
Turnover
increased by approximately 7% over the previous year to approximately
HK$1.4 billion.
-
Profit attributable
to shareholders increased by approximately 10% to HK$72.1 million.
-
Basic earnings
per share increased by approximately 8% to 10.9 cents.
-
Number of
stores in Hong Kong increased by 20 to 166 as at 31 December 2002.
-
First Circle
K store in Guangzhou opened in November 2002. By end- 2002, two
stores were in operation in Guang zhou.
-
Strong cash
position with HK$407.5 million cash on hand and free of bank borrowings
as at 31 December 2002
-
Outlook of
the Hong Kong retail market in 2003 expected to be uncertain which
may adversely impact the Group¡¦s profitability growth.
Convenience
Retail Asia Limited
Consolidated
Profit & Loss Account
Year ended 31 December |
|
2002
HK$'000 |
2001
HK$'000 |
Turnover |
1,393,542 |
1,305,124 |
Cost of sales |
(1,044,124) |
(981,395) |
|
|
|
Gross profit |
349,418 |
323,729 |
Other revenues |
114,575 |
98,200 |
Store expenses |
(316,550) |
(288,602) |
Distribution costs |
(21,509) |
(18,037) |
Administrative expenses |
(48,237) |
(46,878) |
Start-up costs for China operations |
(8,339) |
(3,367) |
|
|
|
Profit for the year |
69,358 |
65,045 |
Minority interests |
2,759 |
412 |
|
|
|
Profit attributable to shareholders |
72,117 |
65,457 |
|
|
|
Basic earnings per share |
10.9 cents |
10.1 cents |
|
|
|
|