Convenience Retail Asia reports satisfactory growth in
turnover and profit for the first half

Sustained business growth and consolidation in the second half
in both Hong Kong and Guangzhou

Hong Kong, 4 August 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 both turnover and profit for the second quarter buoyed by the continuing trend of economic recovery in Hong Kong.

For the three-month period ended 30 June 2004, the Group's turnover grew by 15% to HK$432.8 million when compared to the same period in 2003. Net profit attributable to shareholders increased by 11% to HK$18.4 million. Earnings per share were 2.7 cents. In view of the Group's strong cash flow position and profitability, the Board of Directors has resolved to declare an increase in the interim dividend from 1 cent per share in 2003 to 1.25 cents per share this year.

For the six months ended 30 June 2004, the Group's turnover and profit were HK$836.5 million and HK$26.9 million respectively. Earnings per share were 4 cents.

Mr. Richard Yeung, Chief Executive Officer of CRA, said, "The Group maintained its momentum of growth during the second quarter of the year which can be attributed to the gradual improvement in Hong Kong's economy and the increase in visitors from the Chinese Mainland. The robust retail market in China also provided strong support to our operation in Guangzhou. "

Business Review

During the three months ended 30 June 2004, the increase in turnover was achieved both through the opening of new stores and an increase in turnover among comparable stores (stores in existence throughout the first and second quarter of 2003 and 2004) which registered an increase of 3% in Hong Kong and 27% in Guangzhou.

During the second quarter of 2004, the retail market in Hong Kong remained robust as total retail sales value continued to register a healthy double-digit year-on-year growth in April and May. The increase was partly magnified by a relatively low base of comparison in 2003 due to the SARS impact.

Against the backdrop of a buoyant market environment, the Group pressed ahead with its new store-opening programme. By the end of the second quarter, total store number reached 199 (including news leases committed), well on track for the Group's target of 210 stores by the end of 2004. This was achieved despite escalating retail rentals which rendered the quest for store sites with affordable rentals much more difficult.

In Guangzhou, the economy continued to perform well across all sectors and the retail market in Guangzhou is solidly supported by a strong increase in consumer spending. The performance of the Group's Guangzhou operation was very much in line with expectation. Transaction count per store day continued to grow steadily as aggressive marketing programmes delivered incremental sales from specific target customer groups and new product categories. There is no evidence that the presence of new entrants has posed any threat to the Circle K store business.

By the end of June 2004, there were a total of 192 stores in Hong Kong and 12 stores in Guangzhou compared to 172 stores in Hong Kong and four in Guangzhou as at end-June 2003.

Outlook

Looking ahead, Mr. Yeung expects the second half of the year to be a period of sustained business growth and consolidation in both Hong Kong and Guangzhou.

Whilst slow but consistent improvement in the unemployment rate, reduced deflation, strong property market performance and the significant uptrend in inbound tourist figures will continue to nurture favourable market environment for business and margin growth in Hong Kong, Mr. Yeung added that more stores are expected to become profitable in Guangzhou in the second half, especially during the hot summer and sales momentum is sustained.

"The Group has also been actively pursuing its plans of expanding into other cities in the Pearl River Delta, with feasibility studies being due for review in the latter part of the 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 192 company-owned-and-managed stores as of 30 June 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 June 2004, 12 Circle K stores were in operation in Guangzhou.

CRA corporate website: www.cr-asia.com

About Li & Fung

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.

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Convenience Retail Asia Limited

Half Year Results
For the Period Ended 30 June 2004

HIGHLIGHTS

• Economic recovery in Hong Kong contributed to satisfactory growth in turnover and profitability.

• Well on track with new store opening program in Hong Kong; number of stores increased by two to 192 during the quarter and seven stores are scheduled to open soon.

• Expediting store openings in quality locations in Southern China will be the Group's top priority in the second half; with number of stores in Guangzhou increased by two to 12 during the quarter and three stores scheduled to open soon.

• Strong cash position with HK$495.1 million and no bank borrowings as at 30 June 2004 to fund anticipated growth in the Southern China.

Convenience Retail Asia Limited

Unaudited Consolidated Profit & Loss Account