Convenience Retail Asia Limited

Convenience Retail Asia achieves further growth in turnover and profit for first quarter

Group is positive towards future performance capitalising on
favourable economic outlook

Hong Kong, 5 May 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 increase in both turnover and profit for the first three months ended 31 March 2004 on the back of an overall economic recovery in Hong Kong.

The Group's turnover rose 15% to HK$403.7 million from HK$349.6 million in 2003 first quarter. Profit attributable to shareholders was HK$8.5 million, up 17% compared with the corresponding period last year. Basic earnings per share were 1.3 HK cents.

Mr. Richard Yeung, Chief Executive Officer of CRA, said, "The first three months of the year saw a healthy rebound in the local economy, which started to take shape in the last quarter of 2003 and was well sustained by robust performance of both the stock and property markets as well as a continuous influx of Mainland tourists visiting Hong Kong.

"The strong results we reported for the quarter under review reflected, to a certain extent, a continued revival in local consumer demand and a sustained growth in inbound tourism. Naturally, these were also attributable to the Group's effective cost control initiatives, which resulted in a decrease in store operating and administrative expenses as a percentage of turnover during the quarter."

Business Review

Comparable stores (stores in existence throughout the first quarter of 2003 and 2004) in Hong Kong and Guangzhou showed an increase of 5% and 10% in turnover respectively when compared to the first quarter of 2003.

The turnaround in consumer sentiment in Hong Kong was fully vindicated in the Group's strong sales performance in the first quarter, which reversed the negative trend seen over the past two years.

In the Mainland of China, the Group's Guangzhou operation embarked on a strategic brand building programme and product awareness promotion upon the opening of our tenth outlet. A chain-wide celebration of the event not only generated enthusiastic media interest but also incremental customer traffic and sales.

In addition, promotional and thematic campaigns were conducted to launch a series of new products. Consumer acceptance of the new offerings was most encouraging whilst sales of special occasion gifts were outstanding. At the operations level, stringent cost measures were implemented to improve store margins.

By the end of March 2004, there were a total of 190 stores in Hong Kong and 10 stores in Guangzhou compared to 168 stores in Hong Kong and 4 in Guangzhou as at end-March 2003.


Looking ahead, Mr. Yeung said, "With economic indicators pointing to healthy growth and a return to normal market conditions for both Hong Kong and Guangzhou markets after a year battered by the SARS, the Group is optimistic towards the business performance for the rest of the year. This confidence is further supported by the better-than-expected results recorded in the first quarter."

Yet, in view of the escalation of retail rental levels due to increasing speculative activities in the commercial property market after Chinese New Year, Mr. Yeung added that the Group would exercise caution and prudence in this environment of very high rental levels.

"Nonetheless, the Group is well prepared to fully capitalise on the opportunities for growth and expansion provided by the favourable economic environment that is expected to prevail for the rest of the year in our operating markets," 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 190 company-owned-and-managed stores as of 31 March 2004.

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 March 2004, ten Circle K stores were in operation in Guangzhou.

CRA corporate Web site:

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


2991 6000

Mrs. Louisa Kwan

Direct line:

2991 6229

Convenience Retail Asia Limited

First Quarterly Results
For the Three Months Ended 31 March 2004
  Change 2004 2003

Group turnover +15% HK$403,700,000 HK$349,600,000

Group profit +17% HK$8,509,000 HK$7,256,000

Earnings per share (Basic) +18% 1.3 HK cents 1.1 HK cents

  • Improved economic outlook and recovery in retail market in Hong Kong contributed to a strong performance in turnover and profit.

  • Number of stores in Hong Kong increased by 4 to 190 during the quarter.

  • Number of stores in Guangzhou increased by 3 to 10 during the quarter.

  • Strong cash position with HK$466.7 million and no bank borrowings as at 31 March 2004.

  • Growing pressure on retail rental levels in Hong Kong due to speculative transactions which generated unrealistic expectations among landlords.

  • Focus on store network expansion in Guangzhou and the Pearl River Delta in the coming months.

Convenience Retail Asia Limited

Unaudited Consolidated Profit & Loss Account
Three months ended 31 March
Turnover 403,700 349,600
Cost of sales (305,059) (264,638)

Gross profit 98,641 84,962
Other revenues 29,138 24,919
Store expenses (96,585) (84,559)
Distribution costs (6,856) (5,080)
Administrative expenses (14,699) (12,770)

Profit before taxation 9,639 7,472
Taxation (2,362) (1,473)

Profit after taxation 7,277 5,999
Minority Interest 1,232 1,257

Profit attributable to shareholders 8,509 7,256

Basic earnings per share 1.3 cents 1.1 cents