Convenience
Retail Asia's half year results
maintain satisfactory growth despite adverse retail environment
Hong Kong,
29 July 2002 - Convenience Retail Asia Limited ("CRA"
or "the Group"; SEHK: 8052), operator of the Circle K convenience
store in Hong Kong and China, announced satisfactory growth in both
turnover and profit for the second quarter ended 30 June 2002.
For the three-month
period ended 30 June 2002, CRA recorded a sales turnover increase
of 5% to HK$343.4 million when compared to the same period in 2001.
The increase came primarily from sales at new stores. A 6% decrease
in sales at comparable stores (stores in existence throughout first
and second quarters of 2001 and 2002) was recorded.
The Group's net
profit for the quarter rose by 9% to HK$19.8 million from HK$18.1
million achieved in the same period in the previous year. Increase
in store sales and higher gross margins and other income combined
to contribute to the satisfactory increase. Earnings per share for
the second quarter increased by a moderate 7% from 2.8 HK cents reported
in 2001 to 3.0 HK cents this year.
For the six months
ended 30 June 2002, the Group recorded a turnover of HK$666 million
and a net profit of HK$31.8 million, representing increases of 6%
and 8% respectively when compared to the results for the same period
in 2001.
Commenting on
the performance, Dr. Victor K. Fung, Chairman of CRA, said, "Adverse
retail environment resulting from the current economic downturn in
Hong Kong has posed a tremendous challenge to our business. We are
very pleased to see satisfactory growth for the Group despite rising
unemployment, continuous deflation and declining consumer confidence
and spending in the past quarter."
Mr. Richard Yeung,
Chief Executive Officer of CRA, commented, "The first six months
of the year saw an uphill battle to maintain sales and traffic growth
in a highly unfavourable retail environment. With a customer-driven
strategy, increased productivity and a lot of hard work, the Group
has been able to counteract some of the negative market trends and
maintain a modest sales growth for the chain."
In May, the Group's
store-opening program in Hong Kong hit the 150-store milestone. As
of 30 June 2002, the Group owned and managed 151 Circle K stores in
Hong Kong, compared to 132 stores at the end of the second quarter
2001.
China Update
The application
for business licenses is now in its final stages with the Beijing
Government and the Group's China team plans to open the first batch
of stores in Guangzhou before the end of 2002. This is slightly behind
the original schedule due to the unforeseen need to bring in a new
local joint venture partner in Guangzhou. The negotiation and documentation
for the change in equity structure took longer than expected, causing
a delay in the process.
Business Outlook
It is generally
expected that the sluggish economic environment and impaired consumer
confidence in Hong Kong will continue to pose serious challenges to
retailers in all sectors. According to Mr. Yeung, in the face of tough
conditions, CRA will continue with its strategy of quality growth
while further consolidating its brand positioning as the consumer's
preferred convenience store chain. This can be done by providing superior
customer services, better store environments, more value for the dollar
and aggressive promotions.
"We expect
the Hong Kong operation of Circle K will continue to provide profitability,
sustain quality growth and serve as the showcase for brand building.
The China operation will require investment and resources for aggressive
growth and future expansion. Financially, we expect to see some volatility
in the rate of profit growth in the coming six months due to the uncertainty
in the Hong Kong retail market and the increase in start-up costs
in Southern China," Mr. Yeung concluded.
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 151 company-owned-and-managed
stores in Hong Kong as of 30 June 2002. Major initiatives are planned
for expansion into the southern part of the Mainland of China.
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 Mainland of China and other South East Asian
countries.
For
media inquiry, please contact:
Convenience
Retail Asia Limited
|
Telephone:
|
2991 6000
|
Mrs. Louisa
Kwan
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Direct line:
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2991 6229
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Convenience
Retail Asia Limited
Half
Year Results
For the Period Ended 30 June 2002
|
Three
months ended 30 June |
2002 |
2001 |
|
Group turnover |
+5
% |
HK$343,435,000 |
HK$301,905,000 |
Group profit |
+9
% |
HK$19,752,000 |
HK$11,256,000 |
Basic earnings per share |
+7 % |
3.0
HK cents |
1.8 HK cents |
|
Six
months ended 30 June |
2002 |
2001 |
|
Group turnover |
+6
% |
HK$666,020,000 |
HK$628,430,000 |
Group profit |
+8 % |
HK$31,776,000 |
HK$29,315,000 |
Basic earnings per share |
+4 % |
4.8
HK cents |
4.6 HK cents |
|
-
Satisfactory
growth in turnover and profitability despite adverse retail environment
in Hong Kong.
-
Number of
stores in Hong Kong increased by three to 151 during the quarter,
an increase of 19 stores compared to 132 stores as at 30 June
2001.
-
Ten new store
openings in progress, either under construction or with leases
committed.
-
Awaiting official
approval of business licences from Central Government and expect
to open first batch of Southern China stores before year end.
-
Anticipating
volatility in the rate of profit growth in the coming six months
due to uncertainty in the Hong Kong retail market and increase
in start-up costs in Southern China.
-
Strong cash
position with HK$382 million cash on hand and no bank borrowings
as at 30 June 2002.
Convenience
Retail Asia Limited
Unaudited
Consolidated Profit & Loss Account
Six months ended 30 June |
|
2002
HK$'000 |
2001
HK$'000 |
Turnover |
666,020 |
628,430 |
Cost of sales |
(499,646) |
(474,320) |
|
|
|
Gross profit |
166,374 |
154,110 |
Other revenues |
50,820 |
46,000 |
Store expenses |
(151,086) |
(138,512) |
Distribution costs |
(9,024) |
(7,941) |
Administrative expenses |
(23,143) |
(23,376) |
Start-up costs for China operations |
(2,322) |
(1,133) |
|
|
|
Operating profit |
31,619 |
29,148 |
Minority interest |
157 |
167 |
|
|
|
Profit attributable to shareholders |
31,776 |
29,315 |
|
|
|
Basic earnings per share |
4.8 cents |
4.6 cents |
|
|
|
|