Convenience
Retail Asia maintains growth in turnover and net profit for 2003
Plan for
aggressive expansion to take advantage of improving economy and positive
impact of CEPA
Hong Kong,
3 March 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
growth in turnover and net profit for 2003.
The Group's turnover
for the year and the fourth quarter ended 31 December 2003 rose 9.5%
and 9.2% to HK$1.5 billion and HK$394 million respectively compared
to corresponding periods in 2002.
Net profit attributable
to shareholders increased by 0.5% to HK$60.7 million for the year
and by 9.1% to HK$18.6 million for the fourth quarter. Basic earnings
per share remained unchanged at 9.1 HK cents. The Board of Directors
has resolved to recommend a final dividend of 3 HK cents per share
(2002: nil). Together with the interim dividend of 1 HK cent per share,
total dividend for 2003 would be 4 HK cents per share (2002: nil).
Dr. Victor K Fung,
Chairman of CRA, commented, "The Group has achieved a continuous
record of quarter-on-quarter growth in net profit since the Group's
GEM listing in January 2001, with the exception of the first quarter
of 2003 during which a depressed economy and the outbreak of SARS
in Hong Kong brought about an immediate downturn in retail sales across
all market sectors. We are pleased to report such gratifying results
achieved in an exceptionally challenging year."
Mr. Richard Yeung,
Chief Executive Officer of CRA, said, "With the signing of the
Closer Economic Partnership Agreement (CEPA) in late June, visa relaxation
for individual mainland travellers to Hong Kong and fading impact
of SARS, the third quarter saw initial signs of recovery for retail
sales. Coupled with the Group's aggressive marketing programmes and
timely promotional efforts, we were able to boost our sales again
in the fourth quarter."
Business Review
Sales in comparable
stores (stores that were in existence in 2002 and 2003) showed a decline
of 1.1% for the full year and 1.6% for the fourth quarter. The decline
in comparable store sales for the fourth quarter was mainly due to
the decrease in the sales of the non-food category compared to the
same period in 2002 when two very successful premiums accounted for
substantial sales increment in the same quarter. The year-on-year
total chain sales growth was achieved through the opening of new stores
in Hong Kong and Guangzhou.
In Hong Kong,
the Group took on an aggressive approach in marketing with non-stop
promotional activities and timely introduction of products, in order
to compensate for the loss of sales in major product categories caused
by SARS. The Group also continued with its cost control initiatives
which helped to achieve notable savings.
In view of the
outbreak of SARS, the pace of store opening in the first half of the
year was deliberately slowed down by the Group. Momentum picked up
again in the second half to take advantage of the more reasonable
retail rental rates in the aftermath of SARS. During the year, the
Group opened 21 new stores and closed 1 store in Hong Kong.
The Group's distinctive
store model in Guangzhou has successfully positioned Circle K as a
premium convenience store. The Guangzhou operation maintained steady
growth in daily store sales, with the well-received Hot & In products
accounting for a significant portion of the repeat customer traffic.
In November and December 2003, positive store contribution was recorded
chain-wide for the first time.
The Group opened
five stores in Guangzhou in 2003. Strict adherence to an optimum store-size
operation model limited the sites available for opening new stores.
The Group now adopts a more efficient approach in acquiring new store
sites to accelerate expansion in 2004.
As at the end
of the year, the Group had a total of 186 stores in Hong Kong and
seven stores in Guangzhou compared to 166 stores in Hong Kong and
two in Guangzhou as at the end of 2002.
Outlook
Looking ahead,
Mr. Yeung said, "With an increasing number of visitors from the
Chinese Mainland, the stock market rally and the improving property
market, there is good reason to believe that the Hong Kong economy
is heading for a rebound. The Group anticipates that organic growth
coupled with a more intensive store network expansion would be a prudent
strategy to benefit from buoyant consumer sentiment."
"A quality
growth strategy will be maintained in Hong Kong by providing continued
improvement in customer services to build brand preference for Circle
K stores. As a 100% Hong Kong based company, the Group stands to benefit
from CEPA with the opening up of major cities on the Chinese Mainland
for future expansion and more flexibility in ownership structure."
"The Group
believes that the time has come for an aggressive expansion phase
on the Chinese Mainland, and will also commence preparations for expansion
into the northern or eastern cities on the Mainland toward the end
of this year," 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 186 company-owned-and-managed stores as of 31 December 2003.
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 December
2003, seven 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
|
CRA corporate
Web site: www.cr-asia.com
Convenience
Retail Asia Limited
Results
for 2003
|
Increase |
2003 |
2002 |
|
Turnover |
9.5% |
HK$1,526,099,000 |
HK$1,393,542,000 |
|
Profit attributable
to shareholders |
0.5% |
HK$60,707,000 |
HK$60,390,000
* |
|
Basic earnings
per share |
- |
9.1
HK cents |
9.1
HK cents * |
|
Final dividend
per share |
N/A |
3
HK cents |
- |
|
-
Satisfactory
growth in turnover and profit despite the challenging economic
environment in Hong Kong and investment in Guangzhou stores.
-
Turnover increased
by 9.5% over the previous year to HK$1.5 billion.
-
Profit attributable
to shareholders increased by 0.5% to HK$60.7 million.
-
Basic earnings
per share remained unchanged at 9.1 HK cents.
-
Number of
stores in Hong Kong increased by 20 to 186 while that in Guangzhou
increased by 5 to 7 as at 31 December 2003.
-
Strong cash
position with HK$460 million cash on hand and free of bank borrowings
as at 31 December 2003.
-
Having acquired
a full year's operational experience in Guangzhou, the pace of
store-opening programme on the Chinese Mainland will be accelerated
in 2004.
-
The Board
of Directors has resolved to recommend a final dividend of 3 HK
cents per share.
* |
Restated
for income tax effect per Statement of Standard Accounting Practice
("SSAP") No.12 (revised) "Income Taxes" and
long service payment costs per SSAP 34 (revised) "Employee
Benefits" issued by the Hong Kong Society of Accountants |
Convenience
Retail Asia Limited
Consolidated
Profit & Loss Account
Year ended 31 December |
|
2003
HK$'000 |
2002
HK$'000
(Restated)* |
Turnover |
1,526,099 |
1,393,542 |
Cost of sales |
(1,141,575) |
(1,044,124) |
|
|
|
Gross profit |
384,524 |
349,418 |
Other revenues |
120,111 |
114,575 |
Store expenses |
(354,832) |
(316,596) |
Distribution
costs |
(24,548) |
(21,513) |
Administrative
expenses |
(56,409) |
(48,255) |
Start-up
costs for China operations |
- |
(8,339) |
|
|
|
Profit before
taxation |
68,846 |
69,290 |
Taxation |
(12,769) |
(11,639) |
|
|
|
Profit after
taxation |
56,077 |
57,651 |
Minority
interests |
4,630 |
2,739 |
|
|
|
Profit attributable
to shareholders |
60,707 |
60,390 |
|
|
|
Dividend |
26,772 |
- |
|
|
|
Basic earnings
per share |
9.1 cents |
9.1 cents |
|
|
|
* |
Restated
for income tax effect per Statement of Standard Accounting Practice
("SSAP") No.12 (revised) "Income Taxes" and
long service payment costs per SSAP 34 (revised) "Employee
Benefits" issued by the Hong Kong Society of Accountants. |
|