Convenience
Retail Asia continues to achieve strong growth in turnover and net
profit for 2004
Favourable
market environment provides momentum for strategic expansion in Hong
Kong and on the Chinese Mainland
Hong Kong,
3 March 2005
- Convenience Retail Asia Limited ("CRA" or "the Group"; HKEx: 8052),
operator of Circle K convenience stores in Hong Kong and on the Chinese
Mainland, announced another year of encouraging growth in turnover
and net profit for 2004.
The Group's turnover
for the year and the fourth quarter ended 31 December 2004 grew 15.2%
and 14% to HK$1,757.6 million and HK$449 million respectively compared
to same periods in 2003.
Net profit attributable
to shareholders rose by 10.3% to HK$67 million for the year and by
5.4% to HK$19.6 million for the fourth quarter. Basic earnings per
share increased by 9.9% from 9.1 HK cents to 10 HK cents for the year.
The Board of Directors has resolved to recommend a final dividend
of 3.75 HK cents per share (2003: 3 HK cents). Together with the interim
dividend of 1.25 HK cents per share, total dividend for 2004 would
be 5 HK cents per share (2003: 4 HK cents).
Dr. Victor K Fung,
Chairman of CRA, commented, "On the back of a strong rebound in the
economy in 2004, heightened consumer confidence and greater propensity
to spend presented a more favourable market environment for the Group's
business operations. We are delighted to continue to report encouraging
results for the financial year."
Mr. Richard Yeung,
Chief Executive Officer of CRA, said, "The Group's unrelenting pursuit
of building Circle K as the most preferred convenience store chain
in the market through a series of marketing and servicing initiatives
was vindicated in the Group's growing sale figures for 2004. These
efforts included store network expansion to provide more location
convenience, regular and specific thematic promotions, setting a new
benchmark for quality customer service, and providing a highly efficient
and satisfactory shopping experience."
Business Review
Sales in comparable
stores (stores that were in existence in 2003 and 2004) showed an
increase of 4.2% for the full year and 3.1% for the fourth quarter
in Hong Kong. The strong comparable store sales growth was driven
by the Group's aggressive marketing and promotion programmes, category
management initiatives as well as the improvement of the economy of
Hong Kong. The year-on-year total chain sales growth was achieved
through the increase in new stores in both Hong Kong and Guangzhou.
The year 2004
in Hong Kong was filled with non-stop advertising and promotion activities
to maximize consumers' high propensity to spend and to build the image
of Circle K as one of the leading convenience store chains, offering
value, fun and innovation. The Group's persistence in quality category
management also attributed to sales growth in all major categories.
A notable development
in the market penetration of Circle K stores is the increased presence
in mass transportation networks, including the MTR and KCRC stations.
These stores provide extra location convenience for Circle K shoppers
and excellent exposure for the brand.
Highlight of
the year was the opening of the Ocean Shore store in Tseung Kwan O,
Circle K's 200th store in the territory. The event was celebrated
with a well-attended ceremony and a consumer promotion which received
overwhelming responses from customers. During the year, the Group
opened 21 new stores and closed 2 stores in Hong Kong.
In Guangzhou,
the Group's unique store model and exclusive product offerings in
food service offered a sustainable competitive edge. Whilst the first
batch of stores opened during the initial phase of market entry has
been maturing notably with a steady increase of repeat purchases and
an expanding customer base, the flagship store opened in a company-owned
premise located next to an MTR station is also ideally positioned
to attract high-income office workers in the neighbourhood.
A successful
experiment of a housing estate store site also took place during the
year, which reported sales results exceeding original expectations.
This opens up a whole new direction in the search for potential new
store sites targeting households in the middle to high disposable
income brackets.
By the end of
December 2004, the Group had a total of 205 stores in Hong Kong and
20 stores in Guangzhou compared to 186 stores in Hong Kong and seven
in Guangzhou as at end-2003.
Business Outlook
Looking ahead,
Mr. Yeung said, "Consumer confidence is expected to remain optimistic
in the foreseeable future with economic indicators in both Hong Kong
and the Chinese Mainland continuing to trend upward. The Group intends
to accelerate store-opening plans in the secondary cities of the Pearl
River Delta region. Dongguan will be the next target given the high
disposable income of the local residents and its well-developed local
economy."
"Key initiatives
for the Circle K operation in Guangzhou are to experiment with alternative
store models facilitating wider range of store sizes, develop new
markets, refine the site selection process, reduce capital expenditure
per store, control operation expenses and enhance food service offerings
to cater to local customer tastes."
"For Hong Kong,
the basic strategy of quality growth will still be maintained to ensure
consistent improvement in profitability. The Group will invest considerable
resources in brand building in the next three years to ensure that
Circle K will continue to become the most preferred convenience store
chain, to improve the top-of-mind awareness and, most importantly,
to serve as a showcase for visitors from the Chinese Mainland."
-
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 205 company-owned-and-managed
stores as of 31 December 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 December
2004, 20 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. Under
the retailing group, there are two chains in Hong Kong: Circle K and
Toys "R" Us; fashion retailing business Branded Lifestyle which manages
retail sales of Ferragamo, Country Road, Mango and Calvin Klein Jeans
in key markets in Asia; and also a brand licensing unit that specialises
in licensed products. 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
|
Convenience
Retail Asia Limited
Results
for 2004
|
|
Increase |
2004 |
2003 |
Turnover |
15.2% |
HK$1,757,581,000 |
HK$1,526,099,000
|
Profit
attributable to shareholders |
10.3% |
HK$66,959,000 |
HK$60,707,000 |
Basic
earnings per share |
9.9% |
10
HK cents |
9.1
HK cents |
Final
dividend per share |
25% |
3.75
HK cents |
3
HK cents |
|
HIGHLIGHTS
-
Satisfactory growth in turnover and profit supported by positive
consumer sentiment and increase in new stores in Hong Kong and
Guangzhou.
-
Turnover increased by 15.2% over the previous year to HK$1.8
billion.
-
Profit attributable to shareholders increased by 10.3% to HK$67
million.
-
Basic earnings per share increased by 9.9% to 10 HK cents.
-
Number of stores in Hong Kong increased by 19 to 205, while
those in Guangzhou increased by 13 to 20 as of 31 December 2004.
-
Strong cash position with HK$531.4 million cash on hand and
free of bank borrowings as of 31 December 2004.
-
Encouraged by the favourable market environment, the pace of
store openings will be accelerated in Hong Kong and the Pearl
River Delta markets in 2005.
-
The Board of Directors has recommended a final dividend of 3.75
HK cents per share.
Convenience
Retail Asia Limited
Consolidated
Profit & Loss Account
Year ended 31 December |
|
2004
HK$'000
|
2003
HK$'000
|
Turnover |
1,757,581 |
1,526,099 |
Cost of sales |
(1,312,920) |
(1,141,575) |
|
|
|
Gross profit |
444,661 |
384,524 |
Other revenues |
146,084 |
120,111 |
Store expenses |
(422,848) |
(354,832) |
Distribution costs |
(29,092) |
(24,548) |
Administrative expenses |
(63,204) |
(56,409) |
|
|
|
Profit before taxation |
75,601 |
68,846 |
Taxation |
(13,673) |
(12,769) |
|
|
|
Profit after taxation |
61,928 |
56,077 |
Minority interests |
5,031
|
4,630
|
|
|
|
Profit attributable to shareholders |
66,959
|
60,707
|
|
|
|
Dividends |
33,590
|
26,772
|
|
|
|
Basic earnings per share |
10.0 cents |
9.1 cents |
|
|
|
Final dividend per share |
3.75 cents
|
3.0 cents
|
|
|
|
|