Convenience Retail Asia Limited · HKEX:831
Convenience Retail Asia — FY2006 Earnings Presentation
26 slides from Convenience Retail Asia's earnings presentation, Mar 7, 2007
Slide 1: 2006 Annual Results Presentation
2006 Annual Results Presentation Member of Li & Fung Group 7 March 2007
Slide 2: Agenda
2006 Annual Result Presentation Agenda Overall Hong Kong & Guangzhou Retail Markets 2006 Financial Results Highlights 2007 Update & Outlook Questions & Answers
Slide 3: Hong Kong Retail Sales Value
2006 Hong Kong Retail Sales Value Year-on-year % Change 15 11.6 11.5 10.8 10 9.0 9.5 8.4 7.3 7.6 Year-on-year % 7.1 7.0 7.4 6.8 5.3 5.2 5 0 -3.2 -5 May Mar Jun Jan 2006 Nov Jul Aug Apr Oct 2004 2005 2006 Feb Sep Dec Source: Census and Statistics Department, HKSAR
Slide 4: Hong Kong Consumer Price Index
2006 Hong Kong Consumer Price Index Year-on-year % Change 3 2.5 2.3 2.3 2.1 2.2 2.1 2.2 2.0 2.0 1.9 1.9 2 1.6 Year-on-year % 1.2 1.0 1 0 -0.4 -1 May Mar Jun Jan 2006 Nov Jul Aug Apr Oct Feb 2004 2005 2006 Sep Dec Source: Census and Statistics Department, HKSAR
Slide 5: Guangzhou Retail Sales Value
2006 Guangzhou Retail Sales Value Year-on-year % Change 20 17.7 17.3 17.9 16.9 16.4 16.1 15.0 14.8 14.7 15 14.1 Year-on-year % 13.2 12.9 12.9 12.1 10 8.7 5 0 May Mar Jan 2006 Jun Nov Jul Aug Apr Oct 2004 2005 2006 Feb Sep Dec Source: Bureau of Statistics, Guangzhou
Slide 6: Guangzhou City Consumer Price Index
2006 Guangzhou City Consumer Price Index Year-on-year % Change 4 3.5 3.4 3.0 3.0 Year-on-year % 3 2.7 2.6 2.3 2.4 2.2 2.0 2.0 2 1.8 1.7 1.5 1 0.8 0 May Mar Jun Jan 2006 Nov Jul Aug Apr Oct 2004 2005 2006 Feb Sep Dec Source: Bureau of Statistics, Guangzhou
Slide 7: 2006 Financial Results Highlights
2006 Financial Results Highlights
Slide 8: Group Turnover
2006 Financial Results Highlights Group Turnover + 12% 3,000 2,231.2 1,995.2 2,000 1,736.5 HK$ Million 1,515.8 1,000 0 2003 2004 2005 2006 No. of store – HK 186 205 230 250 No. of store - China 7 20 45 62
Slide 9: Total Number of Outlets by End of 2006
Total Number of Outlets by End of 2006 2005 2006 Circle K – Hong Kong 230 250 Circle K – Guangzhou 40 52 Circle K – Dongguan 5 8 Circle K – Shenzhen - 2 Sub-total 45 62 CRA Operate 275 312 Zhuhai J.V. 4 6 Macau J.V. 11 16 Total Circle K Stores 290 334
Slide 10: Group Net Profit
2006 Financial Results Highlights Group Net Profit 100 + 2% 73.6 75.1 80 66.3 60.5 HK$ Million 60 40 20 0 2003 2004 2005 2006
Slide 11: Net Profit as % of Turnover
2006 Financial Results Highlights Net Profit as % of Turnover 6 - 0.3% 5 4.0 3.8 3.7 4 3.4 % of Sales 3 2 1 0 2003 2004 2005 2006
Slide 12: Strong Promotions & Turnover
2006 Financial Results Highlights Strong Promotions & Turnover
Slide 13: Gross Margin / Other Income
2006 Financial Results Highlights Gross Margin / Other Income 35 + 0.2% 34 33.2 33.0 % of Sales 33 32.2 32.3 32 31 30 2003 2004 2005 2006
Slide 14: Store Operating Expenses
2006 Financial Results Highlights Store Operating Expenses 30 24.5% 24.7% 25 22.7% 23.2% 7.2 6.7 20 6.5 6.6 % of Sales 15 7.3 7.9 8.2 7.0 10 5 9.2 9.3 9.4 9.8 0 2003 2004 2005 2006 Labour Cost Rental Cost Other Expenses
Slide 15: Basic Earnings Per Share
2006 Financial Results Highlights Basic Earnings Per Share 15 + 0.2 Cent 12 10.9 11.1 9.9 9.1 HK Cents 9 6 3 0 2003 2004 2005 2006
Slide 16: 2006 Financial Results Highlights
2006 Financial Results Highlights 2006 2005 Change Number of Stores 312 275 + 13% Group Turnover (HK$M) 2,231.2 1,995.2 + 12% Group Net Profit (HK$M) 75.1 73.6 + 2% Net Profit as % of Turnover 3.4% 3.7% - 0.3% Basic Earnings Per Share 11.1 Cents 10.9 Cents + 0.2 Cent Total Dividend Per Share Mid Y
Slide 17: 2006 Financial Results Highlights: 4th Quarter
2006 Financial Results Highlights 4th Quarter 2006Q4 2005Q4 Change Group Turnover (HK$M) 566.2 524.2 + 8% Group Net Profit (HK$M) 19.5 20.9 - 7% Net Profit as % of Turnover 3.4% 4.0% - 0.6% Basic Earnings Per Share 2.9 Cents 3.1 Cents - 0.2 Cent
Slide 18: Year-On-Year Profitability Growth
Year-On-Year Profitability Growth 15 12 11.0 10.3 9.5 % Change 9 6 3 2.0 0.2 0 2002 2003 2004 2005 2006
Slide 19: Update on Saint Honore Acquisition
Update on Saint Honore Acquisition 1. Transaction settled on 5 March 2. 56% cash, 44% cash plus CRA shares 3. Total consideration HK$ - Cash paid $494M - Share issued (46.6M) 145M - Professional fees 9M - Total $648M 4. Estimated cash balance from Saint Honore $110M 5. Cash used by CRA for transacti
Slide 20: CRA Pro-Forma 2006 Results
CRA Pro-Forma 2006 Results Before Acquisition After Acquisition Change Turnover (HK$’000) 2,231,217 2,799,759 25.5% Profit attributable to 75,054 99,216 32.2% shareholders (HK$’000) EPS (HK Cents) 11.1 13.7 23.4% No. of stores - Hong Kong 250 326 - PRC 68 74 - Macau 16 22 Total 334 422 No. of employ
Slide 21: 2007 Update & Outlook
2007 Update & Outlook
Slide 22: 2007 Hong Kong Market Outlook
2007 Hong Kong Market Outlook + Improving local consumers’ confidence in spending + Inflation (2-3%) & customers’ acceptance of price increase + More sites available than 2006 - Smoking ban and newspaper & magazine issues - Rental already peaked but still challenging lease renewal negotiations - Hig
Slide 23: 2007 Southern China Market Outlook
2007 Southern China Market Outlook + Overall retail continues to increase at double digit percentage + Rental and energy cost to stabilize - Upward pressure on labour and raw material costs - Cigarette license issue in Dongguan - Competition continues to heat up + First full year of multi-city growt
Slide 24: Target Total Number of Outlets by End of 2007
Target Total Number of Outlets by End of 2007 2006 2007 Actual Target - Circle K Hong Kong 250 280 - Circle K Southern China & Macau 84 135 Total Circle K Stores 334 415 Saint Honore 88 100 Sun-High - 300
Slide 25: 2007 Market Outlook To Summarize
2007 Market Outlook To Summarize Favourable consumer sentiments but inflation pressure on operating expenses in Hong Kong Fastest ever store number growth throughout the PRD Peak investment year for the Pearl River Delta market Contribution from Saint Honore business starting in 2nd half 200
Slide 26: Annual Results Presentation
2006 Annual Results Presentation Member of Li & Fung Group 7 March 2006
Convenience Retail Asia — FY2006 Earnings Presentation on 6ix