Convenience Retail Asia Limited · HKEX:831

Convenience Retail Asia — Q2 2003 Earnings Presentation

26 slides from Convenience Retail Asia's earnings presentation, Jul 28, 2003

  1. Slide 1: 2nd Quarter 2003 Results Presentation

    2 Quarter 2003 Results Pres nd entation A member of the Li & Fung (Retailing) Group 28 July 2003

  2. Slide 2: Hong Kong Total Retail Sales Value

    Hong Kong Total Retail Sales Value Year-on-year % Change 10% Jan-May 2003 : - 7% 2002 Total : - 4% 5% 0% -5% -10% -15% -20% 01/02 02/02 03/02 04/02 05/02 06/02 07/02 08/02 09/02 10/02 11/02 12/02 01/03 02/03 03/03 04/03 05/03 * Source: HKSAR, Census and Statistics Department

  3. Slide 3: Agenda

    2nd Quarter 2003 Result Presentation Agenda  2nd Quarter 2003 Financial Results Highlights  2003 Update & Outlook  Questions & Answers

  4. Slide 4: Group Turnover – 2nd Quarter

    2nd Quarter 2003 Financial Results Highlights Group Turnover – 2nd Quarter 1,600 1,393.5 1,305.1 1,400 1,200 + 10% HK$ Million 1,000 800 600 343.4 377.6 400 200 0 2001 Total 2002 Total 2nd Qtr 2002 2nd Qtr 2003 No. of Stores : 146 166 151 172 (HK) - 2 - 4 (Chin a)

  5. Slide 5: Comparable Stores Sales

    2nd Quarter 2003 Financial Results Highlights 144 Comparable Stores Sales - 1% 340 335 329.5 326.3 330 HK$ Million 325 320 315 310 305 300 2nd Qtr 2002 2nd Qtr 2003

  6. Slide 6: Comparable Stores Sales 2nd Quarter 2003 vs. 2nd Quarter 2002

    144 Comparable Stores Sales 2nd Quarter 2003 vs. 2nd Quarter 2002 Product Category  Cigarette + 13.1%  Non-food + 12.1%  Packaged Drinks & Beer - 10.5%  Packaged Ice Cream - 8.7%

  7. Slide 7: Group Turnover – June YTD

    2nd Quarter 2003 Financial Results Highlights Group Turnover – June YTD 1,600 1,393.5 1,305.1 1,400 + 9% 1,200 HK$ Million 1,000 666.0 727.2 800 600 343.4 377.6 400 200 322.6 349.6 0 2001 Total 2002 Total June YTD June YTD 2002 2003 No. of Stores : 146 166 151 172 (HK) - 2 - 4 (China)

  8. Slide 8: Group Net Profit – 2nd Quarter

    2nd Quarter 2003 Financial Results Highlights Group Net Profit – 2nd Quarter 70 60.5 * 60 55.0 * + 2% 50 HK$ Million 40 30 16.3 * 16.6 20 10 0 2001 Total 2002 Total 2nd Qtr 2002 2nd Qtr 2003 * Restated for Income Tax Effect Per SSAP No.12

  9. Slide 9: Group Net Profit – June YTD

    2nd Quarter 2003 Financial Results Highlights Group Net Profit – June YTD 60.5 * 70 60 55.0* - 9% 50 HK$ Million 40 26.2 * 23.8 30 20 16.3 16.6 10 9.9 7.2 0 2001 Total 2002 Total June YTD June YTD 2002 2003 * Restated for Income Tax Effect Per SSAP No.12

  10. Slide 10: Net Profit as % of Sales – 2nd Quarter

    2nd Quarter 2003 Financial Results Highlights Net Profit as % of Sales – 2nd Quarter 7% - 0.3% 6% 4.7% * 5% 4.2% * 4.3% * 4.4% 4% 3% 2% 1% 0% 2001 Total 2002 Total 2nd Qtr 2002 2nd Qtr 2003 * Restated for Income Tax Effect Per SSAP No.12

  11. Slide 11: Net Profit as % of Sales – June YTD

    2nd Quarter 2003 Financial Results Highlights Net Profit as % of Sales – June YTD 7% - 0.6% 6% 5% 4.2% * 4.3%* 3.9% * 4% 3.3% 3% 2% 1% 0% 2001 Total 2002 Total June YTD June YTD 2002 2003 * Restated for Income Tax Effect Per SSAP No.12

  12. Slide 12: Basic Earnings Per Share – 2nd Quarter

    2nd Quarter 2003 Financial Results Highlights Basic Earnings Per Share – 2nd Quarter 10 9.1* 8.5* 9 8 7 HK Cents 6 5 4 2.5 * 2.5 3 2 1 0 2001 Total 2002 Total 2nd Qtr 2002 2nd Qtr 2003 * Restated for Income Tax Effect Per SSAP No.12

  13. Slide 13: Basic Earnings Per Share – June YTD

    2nd Quarter 2003 Financial Results Highlights Basic Earnings Per Share – June YTD 10 9.1* 8.5* 9 - 0.4 Cent 8 7 HK Cents 6 5 4.0 * 3.6 4 3 2.5 2.5 2 1 1.5 1.1 0 2001 Total 2002 Total June YTD June YTD 2002 2003 * Restated for Income Tax Effect Per SSAP No.12

  14. Slide 14: 2nd Quarter 2003 Financial Results Highlights

    2nd Quarter 2003 Financial Results Highlights 2nd Qtr 2002 2nd Qtr 2003 Changes Group Turnover (HK$ 343.4 377.6 + 10% Million) Group Net Profit (HK$ 16.3 * 16.6 + 2% Million) Net Profit as % of Sales 4.7% * 4.4% - 0.3% Basic Earnings Per Share 2.5 Cents * 2.5 Cents - Dividend - 1.0 Cent + 1.0 Cent *

  15. Slide 15: Why 2nd Quarter 2003 Results? Lower Gross Margin/Other Income

    Why 2nd Quarter 2003 Results? Lower Gross Margin/Other Income Gross Margin/Other Income as % of Sales (Excluding Interest) - 1% 34% 33.2% 32.8% 33% 32.2% 32% 31.6% 31% 30% 2001 Total 2002 Total 2nd Qtr 2002 2nd Qtr 2003

  16. Slide 16: Why 2nd Quarter 2003 Results? Lower Expenses as % of Sales

    Why 2nd Quarter 2003 Results? Lower Expenses as % of Sales Expenses as % of Sales 2003 vs. 2002  Store Operating Expenses - HK 0.8 Lower - China (0.3) Higher  Distribution (0.3) Higher  Administrative Expenses (0.2) Higher  China Start-up Expenses 0.4 Lower 0.4 Lower

  17. Slide 17: Why 2nd Quarter 2003 Results? Net Profit By Market

    Why 2nd Quarter 2003 Results? Net Profit By Market 2nd Qtr 2002 2nd Qtr 2003 Changes (HK$ M) (HK$ M) (HK$ M) Hong Kong Market 17.5 18.7 1.2 China Market (1.2) (2.1) (0.9) Total 16.3 16.6 0.3

  18. Slide 18: 2003 Update & Outlook

    2003 Update & Outlook

  19. Slide 19: Circle K Hong Kong

    2003 Update & Outlook Circle K Hong Kong Hong Kong Retail Sales Year-on-year % Change (Value)  SARS Impact Minor 12%  Higher Unemployment & Deflation 8% 4%  Hong Kong Retail Sales Improving 0% But Lower Than 2002’s -4%  Growing Pressure on Comparable -8% Store Sales & Gross Margin -12%  Rental

  20. Slide 20: Circle K Hong Kong Tactics – Defensive

    2003 Update & Outlook Circle K Hong Kong Tactics Defensive Tactics  Lower Product Costs & Pricing  Maintain Gross Margin  Reduce Operating Expenses  New Store Opening Only with Right Economics

  21. Slide 21: Circle K Hong Kong Tactics – Offensive

    2003 Update & Outlook Circle K Hong Kong Tactics Offensive Tactics  More Aggressive Promotions:  Micro-wave Lunch Boxes  Tie-in Promotions with Coca-Cola  Increase STF (Speed, Tidiness & Friendliness) Gap Versus Competition  Localization of Stores  “Hot & In” Counters in Commercial Areas

  22. Slide 22: Circle K Store Growth

    2003 Update & Outlook Circle K Store Growth Hong Kong  Beginning of Year 166  Opened So Far (as at 28 July 2003) +9  Under Construction / Committed +6  Target Store Number at End of the Year 190

  23. Slide 23: Circle K China

    2003 Update & Outlook Circle K China  Strategies of Differentiation and Hard Circle K China 2003 Weekly Total Sales to Copy Very Important  “Hot & In” Right Strategy  Increasing Customer Preference & Weekly Sales  Need Improvement in Category 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 Ma

  24. Slide 24: Circle K China – Benefits of CEPA

    2003 Update & Outlook Circle K China Benefits of CEPA 1. Wholly-owned Enterprise 2. Prefectural & County Cities 3. Lower Qualifying Requirements 4. Flexibility & Efficiency

  25. Slide 25: Circle K China

    2003 Update & Outlook Circle K China  Add Resources and Expedite Store Development  Review & Refine Business Model to Cut Down on Investment & Sizing  10 – 15 Stores by Year End  Developing A Smaller Store Model  Uphold Strategies  Available for Franchising  Quickly Build No. of Outlets  Add

  26. Slide 26: 2003 Update & Outlook

    2003 Update & Outlook  Tough Hong Kong Market Conditions  Profitability and Cash Flow from Operations Still Healthy  China Strategies on Track But Need to Refine Model & Speed Up Expansion  Uncertain Profitability Outlook for 2nd Half 2003

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