22ndnd Quarter 2004 Quarter 2004 Results PresentationResults Presentation

A member of the Li & Fung (Retailing) GroupA member of the Li & Fung (Retailing) Group 4 August 20044 August 2004

2

Hong Kong Total Retail Sales ValueHong Kong Total Retail Sales ValueYear-on-year % ChangeYear-on-year % Change

-20

-15

-10

-5

0

5

10

15

20

25

% C

ha

ng

e

01

/03

02

/03

03

/03

04

/03

05

/03

06

/03

07

/03

08

/03

09

/03

10

/03

11

/03

12

/03

01

/04

02

/04

03

/04

04

/04

05

/04

Source: Census and Statistics Department, HKSAR

Overall Jan - May 2004: +14%Supermarket: -1.9%

3

Guangzhou Total Retail Sales Value Guangzhou Total Retail Sales Value Year-on-year % ChangeYear-on-year % Change

0

2

4

6

8

10

12

14

16

% C

ha

ng

e

01

/03

02

/03

03

/03

04

/03

05

/03

06

/03

07

/03

08

/03

09

/03

10

/03

11

/03

12

/03

01

/04

02

/04

03

/04

04

/04

05

/04

06

/04

Source: Bureau of Statistics, Guangzhou

Overall Jan – June 2004: +13%

4

22ndnd Quarter 2004 Results Presentation Quarter 2004 Results PresentationAgendaAgenda

22ndnd Quarter 2004 Financial Results Highlights Quarter 2004 Financial Results Highlights

2004 Outlook & Update2004 Outlook & Update

Questions & AnswersQuestions & Answers

5

2004 Financial Results Highlights2004 Financial Results HighlightsGroup Turnover – 2Group Turnover – 2ndnd Quarter Quarter

1,393.51,526.1

377.6 432.8

0

500

1,000

1,500

2,000

HK

$ M

illio

n

2002 2003 2nd Qtr 2003 2nd Qtr 2004

+ 15%+ 15%

No. of store – HKNo. of store – HK 166166 186186 172172 192192

No. of store - ChinaNo. of store - China 22 77 44 1212

6

2004 Financial Results Highlights2004 Financial Results Highlights164 Comparable Stores Sales – 2164 Comparable Stores Sales – 2ndnd Quarter Quarter

367.9

380.5

300

320

340

360

380

400

HK

$ M

illio

n

2nd Qtr 2003 2nd Qtr 2004

+ 3.4%+ 3.4%

7

Great PromotionsGreat Promotions

Lucky Star Promotion Student Loyalty Promotion

8

2004 Financial Results Highlights2004 Financial Results HighlightsGroup Turnover – June YTDGroup Turnover – June YTD

1,393.51,526.1

377.6

349.6

432.8

403.7

0

500

1,000

1,500

2,000

HK

$ M

illio

n

2002 2003 June YTD2003

June YTD2004

+ 15%+ 15%

No. of store – HKNo. of store – HK 166166 186186 172172 192192

No. of store - ChinaNo. of store - China 22 77 44 1212

727.2836.5

9

Improvement in Gross Margin /Improvement in Gross Margin /Other IncomeOther Income

32.8% 32.6%32.2%

33.6%

30%

31%

32%

33%

34%

35%

36%

% o

f S

ales

2002 2003 2nd Qtr 2003 2nd Qtr 2004

Gross Margin/Other Income as % of Sales(Excluding Interest)

+ 1.4%+ 1.4%

10

Upward Pressure on Store Operating Upward Pressure on Store Operating ExpensesExpenses

22.7% 23.3% 22.1%23.9%

0%

5%

10%

15%

20%

25%

30%

% o

f S

ales

2002 2003 2nd Qtr 2003 2nd Qtr 2004

11

2004 Financial Results Highlights2004 Financial Results HighlightsGroup Net Profit – 2Group Net Profit – 2ndnd Quarter Quarter

60.4 60.7

16.6 18.4

0

10

20

30

40

50

60

70

HK

$ M

illio

n

2002 2003 2nd Qtr 2003 2nd Qtr 2004

+ 11%+ 11%

12

2004 Financial Results Highlights2004 Financial Results HighlightsGroup Net Profit – June YTDGroup Net Profit – June YTD

60.4 60.7

16.6

7.2

18.4

8.5

0

10

20

30

40

50

60

70

HK

$ M

illio

n

2002 2003 June YTD2003

June YTD2004

+ 13%+ 13%

23.826.9

13

2004 Financial Results Highlights2004 Financial Results HighlightsNet Profit as % of Sales – 2Net Profit as % of Sales – 2ndnd Quarter Quarter

4.3%4.0%

4.4% 4.2%

0%

1%

2%

3%

4%

5%

6%

% o

f Sal

es

2002 2003 2nd Qtr 2003 2nd Qtr 2004

14

2004 Financial Results Highlights2004 Financial Results HighlightsNet Profit as % of Sales – June YTDNet Profit as % of Sales – June YTD

4.3%4.0%

3.3% 3.2%

0%

1%

2%

3%

4%

5%

6%

% o

f Sal

es

2002 2003 June YTD2003

June YTD2004

15

Net Profit by MarketNet Profit by Market

22ndnd Qtr 2003 Qtr 2003(HK$ M)(HK$ M)

22ndnd Qtr 2004 Qtr 2004(HK$ M)(HK$ M)

ChangesChanges(HK$ M)(HK$ M)

Hong Kong MarketHong Kong Market 18.718.7 20.920.9 + 2.2+ 2.2

China MarketChina Market (2.1)(2.1) (2.5)(2.5) - 0.4- 0.4

TotalTotal 16.616.6 18.418.4 + 1.8+ 1.8

16

2004 Financial Results Highlights2004 Financial Results HighlightsBasic Earnings Per Share – 2Basic Earnings Per Share – 2ndnd Quarter Quarter

9.1 9.1

2.5 2.7

0

2

4

6

8

10

HK

Cen

ts

2002 2003 2nd Qtr 2003 2nd Qtr 2004

+ 0.2 Cent+ 0.2 Cent

17

2004 Financial Results Highlights2004 Financial Results HighlightsBasic Earnings Per Share – June YTDBasic Earnings Per Share – June YTD

9.1 9.1

2.5

1.1

2.7

1.3

0

2

4

6

8

10

HK

Cen

ts

2002 2003 June YTD2003

June YTD2004

+ 0.4 Cent+ 0.4 Cent

3.6 4.0

18

22ndnd Quarter 2004 Financial Results Quarter 2004 Financial Results HighlightsHighlights

22ndnd Qtr 2003 Qtr 2003 22ndnd Qtr 2004 Qtr 2004 % Change% Change

Group Turnover (HK$ Group Turnover (HK$

Million)Million)377.6377.6 432.8432.8 + 15%+ 15%

Group Net Profit (HK$ Group Net Profit (HK$

Million)Million)16.616.6 18.418.4 + 11%+ 11%

Net Profit as % of SalesNet Profit as % of Sales 4.4%4.4% 4.2%4.2% - 0.2%- 0.2%

Basic Earnings Per ShareBasic Earnings Per Share 2.5 Cents2.5 Cents 2.7 Cents2.7 Cents + 0.2 Cent+ 0.2 Cent

Interim DividendInterim Dividend 1 Cent1 Cent 1.25 Cents1.25 Cents + 0.25 Cent+ 0.25 Cent

19

Year-On-Year Quarterly Profitability Year-On-Year Quarterly Profitability GrowthGrowth

49

2

28

-27

27

9

17

11

-30

-20

-10

0

10

20

30

% C

ha

ng

e

Q12002

Q22002

Q32002

Q42002

Q12003

Q22003

Q32003

Q42003

Q12004

Q22004

**

*

*

* Restated for income tax effect per SSAP No.12 (revised) and long service payment costs per SSAP No.34 (revised)

20

2004 Update & Outlook2004 Update & Outlook

21

2004 Update & Outlook2004 Update & OutlookCircle K Hong Kong – Quality GrowthCircle K Hong Kong – Quality Growth

Consumer sentiment continues to Consumer sentiment continues to

improve graduallyimprove gradually

Easing deflation and unemploymentEasing deflation and unemployment

Upward pressure on rentalUpward pressure on rental

Maintain quality growth strategyMaintain quality growth strategy

Existing number of stores:Existing number of stores: 193 193

Committed / In progress: Committed / In progress: 11 11

Forecast – end of 2004:Forecast – end of 2004: 210 210

22

2004 Update & Outlook2004 Update & OutlookCircle K ChinaCircle K China

Stores sales and P&L continue to improveStores sales and P&L continue to improve

Existing number of stores:Existing number of stores: 1313

Committed / In progress:Committed / In progress: 3 3

Forecast – End of 2004:Forecast – End of 2004: 3030

Speed up growth:Speed up growth:

Organic growth – Doing it rightOrganic growth – Doing it right

Entry into other citiesEntry into other cities

Aggressive growth strategies to comeAggressive growth strategies to come

23

2004 Update & Outlook2004 Update & OutlookTo SummarizeTo Summarize

Hong Kong market improving graduallyHong Kong market improving gradually

Rental cost is a concernRental cost is a concern

China market – expansion strategy China market – expansion strategy

instead of P&L issueinstead of P&L issue

Ready for aggressive growthReady for aggressive growth

Customer brand preference, Customer brand preference,

comparable store sales and profitability comparable store sales and profitability

expected to continue trends of first halfexpected to continue trends of first half

22ndnd Quarter 2004 Quarter 2004 Results PresentationResults Presentation

A member of the Li & Fung (Retailing) GroupA member of the Li & Fung (Retailing) Group 4 August 20044 August 2004