Convenience Retail Asia Limited

Convenience Retail Asia's Half Year Results
Maintains Solid Turnover and Profit Growth

Hong Kong, 27 July 2001 - Convenience Retail Asia Limited ("CRA" or "the Group") [SEHK code: 8052], operator of Circle K convenience stores in Hong Kong and China, announced healthy growth in both turnover and profit for the second quarter ended 30 June 2001.

For the period, the Group reported turnover of HK$326.5 million, a 14 percent increase over the same period last year. Of this increase, 3 percent was generated by an increase in sales contributed by existing stores, and 11 percent was generated by an increase in Circle K outlets. As of the end of the second quarter, CRA operated a total of 132 Circle K stores in the SAR, compared to 114 stores at the end of the second quarter 2000.

The Group also recorded a net profit of HK$18.1 million in the second quarter, which represents a 33 percent increase over the HK$13.5 million achieved in the same period last year. Earnings per share increased by a moderate 4 percent, from 2.7 cents reported last year to 2.8 cents this year.

For the six months ended 30 June 2001, the Group recorded turnover of HK$628.4 million and net profit of HK$29.3 million, which represents increases of 17 percent and 60 percent, respectively, when compared to the results for the six months ended 30 June 2000.

Dr. Victor K. Fung, Chairman of CRA, said: "We are encouraged by the healthy increase in store sales and our ability to maintain margins and control expenses, despite a very challenging period, both economically and environmentally. Namely, our market is confronting very conservative retail spending by consumers, and the unusually wet weather this year has placed added pressure on our business. The fact that we have again recorded a satisfactory net profit growth helps underscore the validity of this business model."

Hong Kong Business Outlook

For the Hong Kong market, the Group will continue building customer preference for the Circle K brand, and maintaining steady growth in store outlets, sales and profitability. To achieve these goals, the Group has aggressive promotions in place and will also launch the quickest Octopus Reloading Service in the second half of the year. These efforts will help CRA maintain growth in the coming months.

Richard Yeung, Chief Executive Officer of CRA, said: "We will continue to add convenience store outlets in Hong Kong in high-pedestrian traffic areas, and support all of our outlets with aggressive in-store promotions, quality customer service, and value pricing to capture customer preference. In addition, new initiatives, such as the Octopus Reloading Service, are expected to further drive traffic into our outlets and thus support our continued growth in Hong Kong."

China Business Outlook

With the imminent entry of China into the WTO and the expected strong growth in consumer spending, the outlook for the retail market is favourable. In keeping with its initial business plan, the Group recently submitted its application to obtain a business licence for the Pearl River Delta Area.

The approval process, however, will be quite complicated and time consuming. During this period, CRA will continue building its organization and supply chain infrastructure on the Mainland so that it is in a position to commence store operations in Guangzhou within one to two months from day of obtaining the business licence.

About CRA
Convenience Retail Asia 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 comprises 132 company owned-and-managed stores in Hong Kong as of 30 June 2001. Major initiatives are planned for expansion into the southern part of the Mainland of China.

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. Other chains within the retailing group are Toys "R" Us and Fun Fun World. The retailing group's business extends from Hong Kong to Taiwan, Singapore, and Malaysia, with plans for expansion into China and other South East Asian countries.


For more information, please contact:
Scotchbrook-BSMG Worldwide (Hong Kong) Limited Telephone: 2877 3939
Fannie Mok Direct line: 2863 9119

CRA corporate Web site:


Convenience Retail Asia Limited

Half Year Results
For the Period Ended 30 June 2001

Three months ended 30 June
2001 2000
Group Turnover +14% HK$326.5 M HK$287.4 M
Group Profit +33% HK$18.1 M HK$13.5 M
Earnings per Share +4% 2.8 HK cents 2.7 HK cents

Six months ended 30 June
2001 2000
Group Turnover +17% HK$628.4 M HK$536.4 M
Group Profit +60% HK$29.3 M HK$18.3 M
Earnings per Share +24% 4.6 HK cents 3.7 HK cents

  • Healthy growth in turnover and profitability despite conservative retail spending and unusually wet weather in June.

  • Number of stores in Hong Kong increased by 6 to 132 during the quarter. The increase is within the target of the Company.

  • Currently testing a mini convenience store format in the MTR station at Lok Fu.

  • Application of business licence for operation in Southern China in progress.

  • Strong cash position with HK$308 million cash on hand and no bank borrowings as at 30 June 2001.

  • Profitability growth rate is expected to moderate due to uncertainty in the Hong Kong retail environment and
    increase in start-up costs from the Southern China market.


Convenience Retail Asia Limited

Unaudited Profit & Loss Account

Six months ended 30 June
  2001 2000
HK$¡¦000 HK$¡¦000
Turnover 628,430 536,399
Cost of sales (474,006 ) (400,620 )

Gross profit 154,424 135,779
Other revenues 46,000 29,116
Store expenses (138,231 ) (118,299 )
Distribution costs (8,462 ) (7,451 )
Administrative expenses (23,450 ) (17,061 )
Start up costs for China operations (1,813 ) 0

Operating profit 28,468 22,084
Finance costs 0 (3,772 )

Profit for the period 28,468 18,312
Minority interests 847 0

Profit attributable to shareholders 29,315 18,312

Basic earnings per share 4.6 cents 3.7 cents