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2001
sales & profit remain strong for Convenience Retail Asia 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. Conclusion 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 About Li & Fung Retailing About Guangzhou Grain Group
CRA corporate Web site: www.cr-asia.com
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