Convenience Retail Asia maintains growth in turnover and net profit for 2003

Plan for aggressive expansion to take advantage of improving economy and positive impact of CEPA

Hong Kong, 3 March 2004 - 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 2003.

The Group's turnover for the year and the fourth quarter ended 31 December 2003 rose 9.5% and 9.2% to HK$1.5 billion and HK$394 million respectively compared to corresponding periods in 2002.

Net profit attributable to shareholders increased by 0.5% to HK$60.7 million for the year and by 9.1% to HK$18.6 million for the fourth quarter. Basic earnings per share remained unchanged at 9.1 HK cents. The Board of Directors has resolved to recommend a final dividend of 3 HK cents per share (2002: nil). Together with the interim dividend of 1 HK cent per share, total dividend for 2003 would be 4 HK cents per share (2002: nil).

Dr. Victor K Fung, Chairman of CRA, commented, "The Group has achieved a continuous record of quarter-on-quarter growth in net profit since the Group's GEM listing in January 2001, with the exception of the first quarter of 2003 during which a depressed economy and the outbreak of SARS in Hong Kong brought about an immediate downturn in retail sales across all market sectors. We are pleased to report such gratifying results achieved in an exceptionally challenging year."

Mr. Richard Yeung, Chief Executive Officer of CRA, said, "With the signing of the Closer Economic Partnership Agreement (CEPA) in late June, visa relaxation for individual mainland travellers to Hong Kong and fading impact of SARS, the third quarter saw initial signs of recovery for retail sales. Coupled with the Group's aggressive marketing programmes and timely promotional efforts, we were able to boost our sales again in the fourth quarter."

Business Review

Sales in comparable stores (stores that were in existence in 2002 and 2003) showed a decline of 1.1% for the full year and 1.6% for the fourth quarter. The decline in comparable store sales for the fourth quarter was mainly due to the decrease in the sales of the non-food category compared to the same period in 2002 when two very successful premiums accounted for substantial sales increment in the same quarter. The year-on-year total chain sales growth was achieved through the opening of new stores in Hong Kong and Guangzhou.

In Hong Kong, the Group took on an aggressive approach in marketing with non-stop promotional activities and timely introduction of products, in order to compensate for the loss of sales in major product categories caused by SARS. The Group also continued with its cost control initiatives which helped to achieve notable savings.

In view of the outbreak of SARS, the pace of store opening in the first half of the year was deliberately slowed down by the Group. Momentum picked up again in the second half to take advantage of the more reasonable retail rental rates in the aftermath of SARS. During the year, the Group opened 21 new stores and closed 1 store in Hong Kong.

The Group's distinctive store model in Guangzhou has successfully positioned Circle K as a premium convenience store. The Guangzhou operation maintained steady growth in daily store sales, with the well-received Hot & In products accounting for a significant portion of the repeat customer traffic. In November and December 2003, positive store contribution was recorded chain-wide for the first time.

The Group opened five stores in Guangzhou in 2003. Strict adherence to an optimum store-size operation model limited the sites available for opening new stores. The Group now adopts a more efficient approach in acquiring new store sites to accelerate expansion in 2004.

As at the end of the year, the Group had a total of 186 stores in Hong Kong and seven stores in Guangzhou compared to 166 stores in Hong Kong and two in Guangzhou as at the end of 2002.

Outlook

Looking ahead, Mr. Yeung said, "With an increasing number of visitors from the Chinese Mainland, the stock market rally and the improving property market, there is good reason to believe that the Hong Kong economy is heading for a rebound. The Group anticipates that organic growth coupled with a more intensive store network expansion would be a prudent strategy to benefit from buoyant consumer sentiment."

"A quality growth strategy will be maintained in Hong Kong by providing continued improvement in customer services to build brand preference for Circle K stores. As a 100% Hong Kong based company, the Group stands to benefit from CEPA with the opening up of major cities on the Chinese Mainland for future expansion and more flexibility in ownership structure."

"The Group believes that the time has come for an aggressive expansion phase on the Chinese Mainland, and will also commence preparations for expansion into the northern or eastern cities on the Mainland toward the end of this year," 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 186 company-owned-and-managed stores as of 31 December 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 December 2003, seven 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 Chinese Mainland and other South East Asian countries.

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CRA corporate Web site: www.cr-asia.com

Convenience Retail Asia Limited

Results for 2003

• Satisfactory growth in turnover and profit despite the challenging economic environment in Hong Kong and investment in Guangzhou stores.

• Turnover increased by 9.5% over the previous year to HK$1.5 billion.

• Profit attributable to shareholders increased by 0.5% to HK$60.7 million.

• Basic earnings per share remained unchanged at 9.1 HK cents.

• Number of stores in Hong Kong increased by 20 to 186 while that in Guangzhou increased by 5 to 7 as at 31 December 2003.

• Strong cash position with HK$460 million cash on hand and free of bank borrowings as at 31 December 2003.

• Having acquired a full year's operational experience in Guangzhou, the pace of store-opening programme on the Chinese Mainland will be accelerated in 2004.

• The Board of Directors has resolved to recommend a final dividend of 3 HK cents per share.

Convenience Retail Asia Limited

Consolidated Profit & Loss Account