Convenience Retail Asia reports
satisfactory growth in turnover and profit
for the third quarter

Upturn in economic environment generates
additional momentum for growth

Hong Kong, 4 November 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 net profit for the three months ended 30 September 2003, despite challenges in the retail market.

For the third quarter of 2003, the Group's turnover reached HK$404.9 million, a 10% increase compared to the same period last year.

The Group recorded a net profit of HK$18.2 million, which represents a 6% increase over the net profit of HK$17.1 million for the corresponding period in 2002. Earnings per share increased by 0.1 HK cents to 2.7 HK cents per share during the quarter.

For the nine months ended 30 September 2003, the Group recorded a turnover of HK$1,132.1 million and net profit of HK$42.1 million, representing an increase of 10% and a decline of 3% respectively when compared to the results for the nine months ended 30 September 2002.

Dr. Victor K. Fung, Chairman of CRA, commented, "The third quarter saw initial signs of an economic turnaround as the overhang of SARS gradually faded away. The combined effects of the Closer Economic Partnership Arrangement (CEPA) announcement, the prospects of individual travel by Mainland Chinese to Hong Kong and the continuing strong performance of export trade resulted in a significant upswing in the overall business environment. All these economic factors contributed to a turnaround in consumer sentiments which helped to boost our performance during the period under review. We are pleased with the set of results."

Mr. Richard Yeung, Chief Executive Officer of CRA, said, "During this period of heightened consumer interest, we undertook aggressive marketing programmes with innovative themes. The success of these timely promotional efforts contributed substantially to incremental sales and traffic at Circle K outlets during the peak summer months."

Business Review

Although consumer sentiments in Hong Kong improved over the last quarter, consumers were cautious with their spending. Turnover of comparable stores (i.e. stores in existence throughout the first, second and third quarters of 2002 and 2003) declined 1% during the third quarter. The increase in turnover in the past three months came from sales generated by new stores (non-comparable stores). Primarily as a result of the increase in store sales and higher gross margins / other income, the Group recorded a net profit increase over the same period in 2002.

In Hong Kong, the newly launched house brand Ding-a-Meal chilled meal box continued its growth momentum providing concrete evidence of market acceptance and showing considerable potential for future line extensions. The hot and sunny weather also helped to boost the sales of packaged beverages and other seasonal products. As a result of the more buoyant market environment, the Group accelerated its store opening programme and opened eight stores during the quarter.

In Guangzhou, the Hot & In food service products contributed significantly to store sales. This notable sales mix will become a key competitive strength for Circle K's future development in Guangzhou and other new markets. Three new sites have been identified and committed for opening in the coming quarter, in line with the Group's forecast of operating ten stores by the end of 2003. In order to facilitate new store site acquisition, the Group is developing a smaller sized store model of around 60 square metres. Once finalised and tested successfully, the new store concept will provide greater flexibility in locating suitable store sites and will enable us to accelerate our store-openings in 2004.

As at the end of the quarter, the Group had a total of 180 stores in Hong Kong and five stores in Guangzhou compared to 157 stores in Hong Kong and none in Guangzhou as at the end of third quarter of 2002.

Business Outlook

Looking ahead, Mr. Yeung said, "For the first time in many months, we are seeing a more positive outlook in consumer sentiments in Hong Kong. The recent upturn in overall retail sales will provide a more favourable economic backdrop and generate additional momentum to stimulate consumer spending.

"The Group will remain vigilant in monitoring the fast-changing market trends. A large-scale brand building campaign will be launched in November this year to further boost sales and profitability."

In Guangzhou, consumer sentiments are expected to remain upbeat and propensity to spend positive. However, in such a favourable market environment, the possible entry of new convenience store players will contribute towards an increase in the retail real estate market. The Group anticipates that its existing operations will continue to thrive on a growing base of loyal repeat customers.

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 180 company-owned-and-managed stores as of 30 September 2003.

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. As at the end of September 2003, five Circle K stores were in operation in Guangzhou.

CRA corporate Website: 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 Chinese Mainland and other South East Asian countries.

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Convenience Retail Asia Limited

Third Quarterly Results
For the Period Ended 30 September 2003

• Satisfactory growth in turnover and net profit in the third quarter compared to the same quarter last year despite challenging retail environment in Hong Kong.
• Number of stores in Hong Kong increased by eight to 180 during the quarter and six new store openings are in progress.
• Number of stores in Guangzhou increased by one to five and three new store openings are in progress.
• Cautiously optimistic on the profitability outlook for the fourth quarter as the retail market in Hong Kong is beginning to recover and consumer sentiments in Guangzhou remains upbeat.
• Until deflation rate returns to zero, we expect the comparable store growth likely to remain negative.

Convenience Retail Asia Limited

Unaudited Consolidated Profit & Loss Account