Convenience
Retail Asia achieves further growth in turnover and profit for first
quarter
Group
is positive towards future performance capitalising on
favourable economic outlook
Hong
Kong, 5 May 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 increase in both turnover and profit for the
first three months ended 31 March 2004 on the back of an overall economic
recovery in Hong Kong.
The Group's turnover
rose 15% to HK$403.7 million from HK$349.6 million in 2003 first quarter.
Profit attributable to shareholders was HK$8.5 million, up 17% compared
with the corresponding period last year. Basic earnings per share
were 1.3 HK cents.
Mr. Richard Yeung,
Chief Executive Officer of CRA, said, "The first three months
of the year saw a healthy rebound in the local economy, which started
to take shape in the last quarter of 2003 and was well sustained by
robust performance of both the stock and property markets as well
as a continuous influx of Mainland tourists visiting Hong Kong.
"The strong
results we reported for the quarter under review reflected, to a certain
extent, a continued revival in local consumer demand and a sustained
growth in inbound tourism. Naturally, these were also attributable
to the Group's effective cost control initiatives, which resulted
in a decrease in store operating and administrative expenses as a
percentage of turnover during the quarter."
Business Review
Comparable stores
(stores in existence throughout the first quarter of 2003 and 2004)
in Hong Kong and Guangzhou showed an increase of 5% and 10% in turnover
respectively when compared to the first quarter of 2003.
The turnaround
in consumer sentiment in Hong Kong was fully vindicated in the Group's
strong sales performance in the first quarter, which reversed the
negative trend seen over the past two years.
In the Mainland
of China, the Group's Guangzhou operation embarked on a strategic
brand building programme and product awareness promotion upon the
opening of our tenth outlet. A chain-wide celebration of the event
not only generated enthusiastic media interest but also incremental
customer traffic and sales.
In addition, promotional
and thematic campaigns were conducted to launch a series of new products.
Consumer acceptance of the new offerings was most encouraging whilst
sales of special occasion gifts were outstanding. At the operations
level, stringent cost measures were implemented to improve store margins.
By the end of
March 2004, there were a total of 190 stores in Hong Kong and 10 stores
in Guangzhou compared to 168 stores in Hong Kong and 4 in Guangzhou
as at end-March 2003.
Outlook
Looking ahead,
Mr. Yeung said, "With economic indicators pointing to healthy
growth and a return to normal market conditions for both Hong Kong
and Guangzhou markets after a year battered by the SARS, the Group
is optimistic towards the business performance for the rest of the
year. This confidence is further supported by the better-than-expected
results recorded in the first quarter."
Yet, in view of
the escalation of retail rental levels due to increasing speculative
activities in the commercial property market after Chinese New Year,
Mr. Yeung added that the Group would exercise caution and prudence
in this environment of very high rental levels.
"Nonetheless,
the Group is well prepared to fully capitalise on the opportunities
for growth and expansion provided by the favourable economic environment
that is expected to prevail for the rest of the year in our operating
markets," 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 190 company-owned-and-managed stores as of 31 March 2004.
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 March
2004, ten 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.
For media inquiry,
please contact:
Convenience
Retail Asia Limited
|
Telephone:
|
2991 6000
|
Mrs. Louisa
Kwan
|
Direct line:
|
2991 6229
|
Convenience
Retail Asia Limited
First
Quarterly Results
For the Three Months Ended 31 March 2004
|
Change |
2004 |
2003 |
|
Group turnover
|
+15% |
HK$403,700,000 |
HK$349,600,000 |
|
Group profit |
+17% |
HK$8,509,000 |
HK$7,256,000 |
|
Earnings
per share (Basic) |
+18% |
1.3
HK cents |
1.1
HK cents |
|
-
Improved economic
outlook and recovery in retail market in Hong Kong contributed
to a strong performance in turnover and profit.
-
Number of
stores in Hong Kong increased by 4 to 190 during the quarter.
-
Number of
stores in Guangzhou increased by 3 to 10 during the quarter.
-
Strong cash
position with HK$466.7 million and no bank borrowings as at 31
March 2004.
-
Growing pressure
on retail rental levels in Hong Kong due to speculative transactions
which generated unrealistic expectations among landlords.
-
Focus on store
network expansion in Guangzhou and the Pearl River Delta in the
coming months.
Convenience
Retail Asia Limited
Unaudited
Consolidated Profit & Loss Account
Three months ended 31 March |
|
2004
HK$'000 |
2003
HK$'000 |
Turnover |
403,700 |
349,600 |
Cost of
sales |
(305,059) |
(264,638) |
|
|
|
Gross profit |
98,641 |
84,962 |
Other revenues |
29,138 |
24,919 |
Store expenses |
(96,585) |
(84,559) |
Distribution
costs |
(6,856) |
(5,080) |
Administrative
expenses |
(14,699) |
(12,770) |
|
|
|
Profit before
taxation |
9,639 |
7,472 |
Taxation |
(2,362) |
(1,473) |
|
|
|
Profit after
taxation |
7,277 |
5,999 |
Minority
Interest |
1,232 |
1,257 |
|
|
|
Profit attributable
to shareholders |
8,509 |
7,256 |
|
|
|
Basic earnings
per share |
1.3 cents |
1.1 cents |
|
|
|
|