Convenience Retail Asia Limited

2001 sales & profit remain strong for Convenience Retail Asia
Long-term prospects look bright as economy rebounds
& expansion in the Chinese Mainland progresses as planned

Hong Kong, 4 March 2002 - Convenience Retail Asia Limited ("CRA" or "the Group") [SEHK code: 8052], operator of the Circle K convenience store in Hong Kong and China, announced a profit attributable to shareholders of HK$65.5 million for the year ended 31 December 2001, increasing by 36% from the previous year (2000: HK$48.1 million). The Group's total sales turnover for the year was HK$1,305.1 million, rising by 14% from HK$1,140.7 million in 2000. Of this turnover increase, 7% was contributed by the sales growth in existing Circle K stores and 7% was generated by the addition of outlets. As at end-2001, there were a total of 146 CRA-owned-and-managed Circle K stores in Hong Kong, up from 123 in 2000. Basic earnings per share in 2001 were 10.1 HK cents, up 3% from 9.8 HK cents in 2000.

In the fourth quarter of 2001, the Group recorded a sales turnover increase of 10% over the same period in 2000. Quarterly net profit rose by 7% from a year ago to HK$15.9 million. Five new stores were opened in this quarter.

Commenting on the Group's performance, Dr. Victor K. Fung, Chairman of CRA, said, "We are glad to report another year of good results, which reflects the success of our business model under which growth is driven by a clear and focused strategy executed by a team of highly competent, motivated and dedicated staff. "

Mr. Richard Yeung, CRA's Chief Executive Officer, said, "As a result of service excellence, category management and innovative promotions, we were able to sustain our growth momentum while making considerable improvement in our gross margin. We will continue with this model in Hong Kong and we are confident that we can apply it successfully in the Mainland market. "

Hong Kong Business Outlook

While expecting the retail market in Hong Kong to remain slow in the first half of 2002, the Group believes that overall consumer spending should pick up again in the second half. Mr. Yeung said, "The Group will continue to exercise vigilant cost control, maximize productivity and implement aggressive promotions so as to lower costs and improve the margin. We will also continue with our quality store growth programme by opening about 24 stores in 2002, which will help maintain our sales turnover growth."

"By focusing on these initiatives and building the Circle K brand, the Group should be able to sustain stable and quality growth in Hong Kong," Mr. Yeung added.

Chinese Mainland Business Outlook

The Group is also highly bullish about business prospects in the Mainland of China and believes that accession to the World Trade Organization will be conducive to the performance of the retail sector in the Mainland.

To facilitate expansion into Guangdong, CRA signed a joint venture agreement with the Guangzhou Grain Group Limited in December 2001. The equity structure of the joint venture company is such that it is 65%-owned by CRA, 25%-owned by Guangzhou Grain Group Limited and 10%-owned by the Shanghai Shenhong Corporation (a member of the Shanghai Friendship Group). As a result of this cooperation, CRA can leverage the strong retailing background and extensive network of local retail premises of its Guangzhou partner to open a Circle K store chain in Guangzhou in the near future.

Mr. Yeung said that the plan to expand into Guangdong was progressing on schedule and he expected the first Circle K store in Guangzhou to be opened by mid-year of 2002. He also disclosed that initially five to ten stores would be opened and the experience thus gained would form the basis for a more aggressive expansion plan.


Looking ahead, Mr. Yeung commented, "Short-term uncertainties in the Hong Kong market and start-up costs in the Mainland of China might affect profit growth for the Group in 2002. However, in anticipation of an economic rebound in the second half of this year, we believe that we are still on track to achieve our original three-year (2001-2003) target of doubling profit."

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 146 company owned-and-managed stores in Hong Kong as of 31 December 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. 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.

About Guangzhou Grain Group
Guangzhou Grain Group Limited is a state-owned enterprise responsible for maintaining grain reserves to ensure supply and the balance of supply and demand of the grain market. There are ten commercial ventures under its management, including the Guangzhou Municipal Government approved Cereals & Oil Wholesale Exchange Market and the "8" Chain Shop with over 200 grain retail stores all over Guangzhou city. The Group enjoys a total turnover of RMB3 billion and nearly a million tons of product sales annually.

For more information, please contact:
Convenience Retail Asia Limited Telephone: 2991 6000
Mrs. Louisa Kwan Direct line: 2991 6229

CRA corporate Web site:


Convenience Retail Asia Limited

Results for 2001

% Increase
14 %
HK$1,305.1 M
HK$1,140.7 M
Profit attributable to shareholders
36 %
HK$65.5 M
HK$48.1 M
Basic earnings per share
3 %
10.1 HK cents
9.8 HK cents

  • Increased turnover and higher gross margin combined to achieve a significant increase in net profit for the year.
  • Number of stores in Hong Kong increased by 23 to 146 during the year, exceeding the original target of 145.
  • Business licence application in the Mainland of China proceeding according to schedule. Store operation is expected to start in mid-year 2002.
  • A cash balance of HK$355 million as at the end of December 2001 and no bank borrowings.
  • Due to the continued decline of the retail market in Hong Kong and start-up costs in the Mainland of China, profitability growth is expected to moderate in 2002.

Convenience Retail Asia Limited

Consolidated Profit & Loss Account

Year ended 31 December
Turnover 1,305,124 1,140,671
Cost of sales (981,395) (856,611)

Gross profit 323,729
Other revenues 98,200 71,621
Store expenses (288,602) (249,956)
Distribution costs (18,037) (17,390)
Administrative expenses (46,878) (36,921)
Start-up costs for China operations (3,367)


Other operating income - 480

Operating profit 65,045 51,894
Finance costs - (4,106)

Profit for the year 65,045 47,788
Minority interests 412 331

Profit attributable to shareholders 65,457
Basic earnings per share 10.1 cents
9.8 cents