Convenience Retail Asia sustains strong growth in turnover and profit for the third quarter

Favourable outlook for business performance in the last quarter

Hong Kong, 28 October 2004 - Convenience Retail Asia Limited ("CRA" or "the Group"; HKEX: 8052), operator of Circle K convenience stores in Hong Kong and the Chinese Mainland, announced encouraging growth in both turnover and net profit for the three months ended 30 September 2004.

For the third quarter of 2004, the Group's turnover reached HK$472.1 million, an 17% increase compared to the same period last year.

The Group recorded a net profit of HK$20.5 million, which represents a 12% increase over the net profit of HK$18.2 million for the corresponding period in 2003. Earnings per share increased by 0.4 HK cents to 3.1 HK cents per share during the quarter.

For the nine months ended 30 September 2004, the Group recorded a turnover of HK$1,308.5 million and net profit of HK$47.3 million, representing an increase of 16% and 12% respectively when compared to the results for the nine months ended 30 September 2003.

Mr Richard Yeung, Chief Executive Officer of CRA, said, "The robust retail sales growth was well sustained during the third quarter of 2004, thanks to continued economic growth momentum and an improvement in retail spending in both Hong Kong and Guangzhou. Our efforts to increase promotional activities also contributed to the bottom line."

Business Review

Amid favourable economic development and buoyant consumer sentiment, the Group posted a turnover increase that resulted from both new store sales and satisfactory comparable store sales increases. Turnover of comparable store sales in Hong Kong (i.e. stores in existence throughout the first, second and third quarters of 2003 and 2004) increased 5.2% during the third quarter. Comparable store sales in Guangzhou also continued to grow rapidly and increased by 15.9% during the third quarter.

Primarily as a result of the growth in store sales, which was offset to some extent by a rise in store expenses due to increased advertising and promotional expenses, the Group recorded a 12% net profit increase over the same period in 2003.

In Hong Kong, continued improvement in category management has enabled the Group to take full advantage of the positive consumer mood and outperform the market in several major product categories. The highlight of the quarter was the opening of a new Circle K store at the KCRC Hung Hom Terminal. This store provides a great opportunity to capture business from the increasing number of Chinese Mainland visitors as well as heighten exposure of the Circle K brand. The new store, with a unique twin-entrance layout, has generated strong daily sales from the first day of business.

In Guangzhou, stable sales performance was maintained during July and August. Sales trends in September started to pick up strongly, with students going back to school after the summer holidays and spurred by the timely launch of a target-specific student loyalty programme which offered exciting, unique premiums as incentives for repeat purchases. Encouraging sales increases were registered in core categories such as food and packaged drinks, backed by the implementation of aggressive promotion and continued improvement of product mix.

As at the end of the quarter, the Group had a total of 197 stores in Hong Kong and 15 stores in Guangzhou compared to 180 stores in Hong Kong and five in Guangzhou at the end of the third quarter of 2003.

Business Outlook

Looking ahead, Mr Yeung said, "Given the positive trends of all the economic indicators in Hong Kong, the Group has every reason to maintain a favourable outlook for business performance in the last quarter.

"With the management team making every effort to maintain high standards of quality consumer service, maximize profitability and control capital expenditure and operating costs, good progress has been made towards meeting the targeted turnover sales and profitability goals for end of the year."

Mr Yeung concluded, "To capitalize on the business opportunities offered by the tide of bullish market sentiment, the Group intends to roll out a more aggressive store-opening programme in Hong Kong and will also boost its expansion in both Guangzhou and other cities within the Pearl River Delta during 2005."

- ENDS -

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 197 company-owned-and-managed stores as of 30 September 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 September 2004, 15 Circle K stores were in operation in Guangzhou.

CRA corporate website: 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.

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Convenience Retail Asia Limited

Third Quarterly Results
For the Period Ended 30 September 2004

HIGHLIGHTS

• Continual up trend in the Hong Kong retail market contributed to satisfactory growth in turnover and profitability.

• Number of stores in Hong Kong increased by five to 197 during the quarter.

• Number of stores in Guangzhou increased by three to 15 during the quarter.

• Favourable outlook for profitability in the fourth quarter as retail market continues its up trend in Hong Kong.

• Strong cash position with HK$534.1 million and no bank borrowings.

Convenience Retail Asia Limited

Unaudited Consolidated Profit & Loss Account