Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
利亞零售有限公司
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 00831)
RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 DECEMBER 2015Financial Highlights | Change | 2015 HK$'000 | 2014 HK$'000 (Restated) |
| +4.3% | 4,728,151 | 4,531,321 |
| -8.3% | 162,247 | 176,842 |
| -7.5% | 134,177 | 145,008 |
Included Discontinued Operations | +31.5% | 159,178 | 121,032 |
| -8.2% | 17.80 | 19.38 |
Included Discontinued Operations | +30.5% | 21.12 | 16.18 |
| Nil | 13.00 | 13.00 |
Special Full year Basic | N/A Nil | 6.00 16.10 | Nil 16.10 |
Special | N/A | 6.00 | Nil |
Despite weak market sentiment, the Group achieved strong comparable store sales growth in Hong Kong
Core operating profit declined by 8.3%, mainly due to escalating rental and labour costs and higher operating expenditures for FingerShopping.com
Full-year profit including Discontinued Operations increased by 31.5%, primarily due to one-off gain of HK$48 million from sale of Circle K Guangzhou
The Group maintained a strong financial position with net cash of HK$568 million without any bank borrowings
In view of the one-off gain from Circle K Guangzhou sale, the Board proposed to pay a special dividend of 6 HK cents per share
Future ProspectsFollowing sale of loss-making Circle K Guangzhou operations, the Group will focus on driving quality and sustainable profit growth, primarily in Hong Kong, in the short and medium terms
Another challenging year expected in 2016 due to fierce retail competition and weak consumer sentiment
Hong Kong 328
Franchised Circle K StoresGuangzhou | 76 |
Macau | 27 |
Zhuhai | 18 |
Subtotal | 121 |
Total number of Circle K Stores | 449 |
Saint Honore Cake Shops Hong Kong | 89 |
Macau | 9 |
Guangzhou | 40 |
Shenzhen | 1 |
Total number of Saint Honore Cake Shops | 139 |
Total number of Stores under Convenience Retail Asia | 588 |
I am pleased to report that Convenience Retail Asia Limited, together with its subsidiaries (the "Group"), achieved turnover of HK$4,728 million, core operating profit of HK$162 million, net profit for Continuing Operations of HK$134 million and net profit of HK$159 million in 2015.
Sales growth for the year was approximately 4.3%, which was mainly driven by solid performance in comparable store sales.
Compared to last year, core operating profit decreased by 8.3% to HK$162 million. Major reasons were escalating rental and labour costs as well as higher operating expenditures for e-commerce platform FingerShopping.com, which outweighed the growth in comparable store sales across all markets. These factors also impacted net profit for Continuing Operations, causing a slight drop of 7.5% to HK$134 million.
Net profit including Discontinued Operations increased by 31.5% to HK$159 million, primarily due to the one-off gain of HK$48 million for the sale of the Circle K convenience store business in Guangzhou.
Basic earnings per share for Continuing Operations decreased by 8.2%, from 19.38 HK cents to
17.80 HK cents, while basic earnings per share including Discontinued Operations increased by 30.5%, from 16.18 HK cents to 21.12 HK cents.
As at 31 December 2015, the Group had a net cash balance of HK$568 million with no bank borrowings. The Board of Directors has resolved to declare a final dividend of 13 HK cents per share. In view of the one-off gain from the sale of Circle K Guangzhou, the Board has further resolved to declare a special dividend of 6 HK cents per share.
Review of the Hong Kong Retail MarketIt was a difficult year for the retail industry in Hong Kong. Tourism arrivals saw a 2.5% year-on-year drop in 20151, with arrivals from the Chinese Mainland - which contributes the bulk of tourists to Hong Kong - also decreasing 3.0% compared to last year1. The decline in tourism spending, combined with weak market sentiment, had an inevitable impact on retail. Overall retail sales declined by 0.3% in volume and 3.7% in value year on year2. Fortunately, demand from local customers for daily consumable products remained stable, resulting in year-on-year increase in sales dollars in the supermarket category (including convenience stores) of 1.3%2.
Operating costs and rentals remained high throughout most of 2015. In addition, unemployment and underemployment in Hong Kong continued to hover at low rates of approximately 3.3% and 1.4% respectively between October and December in 20153, resulting in keen competition for quality staff across the retail industry.
New Initiatives Drive GrowthDespite a very challenging operating environment, the Group achieved growth in comparable store sales across its convenience and bakery businesses. This was made possible by attractive promotions and offers, identifying and introducing popular new items, and effectively building customer loyalty. One highlight was Circle K Hong Kong's "The Daring New Generation" advertising campaign, launched in support of its new "Dare to Try" brand positioning. The campaign was designed to reach Internet+ customers by introducing trendy new experiences such as popular food, drink and premium items from Japan and Korea as well as "Always Something New" promotions.
The Group continues to invest in FingerShopping.com, an O2O (online to offline) retailing platform that helps meet growing customer demand for internet-based shopping. Because the website's mechanism allows customers to pick up their purchases at Circle K stores, it also helps generate foot traffic and brand loyalty. The gross merchandise value of FingerShopping.com doubled in 2015 as compared with 2014.
The HEARTS employee engagement programme is playing an important role for the Group, helping it retain and develop staff in a highly competitive job market. This initiative aims to nurture a happy, healthy workplace where employees feel valued and are rewarded for customer service excellence. The Group's efforts in workplace satisfaction continue to be recognised across the industry.
Review of the Retail Market on the Chinese MainlandIn 2015, GDP growth on the Chinese Mainland slowed from 7.3% in 20144 to 6.9% in 20155. Total retail sales growth also slowed, dropping from 12% in 20146 to 10.7% in 20157. The consumer confidence index remained stagnant at 1078 in the fourth quarter of 2015, compared to the 1079 recorded in 2014 (both according to a baseline score of 100). The challenges of operating in this market are expected to go on for some time as the country transforms under a wide range of economic reform measures.