2003 Annual Results Presentation

2003 Annual Results Pre2003 Annual Results Presentationsentation

A member of the Li & Fung (Retailing) GroupA member of the Li & Fung (Retailing) Group 3 March 20043 March 2004

2003 Hong Kong Retail Sales Value2003 Hong Kong Retail Sales ValueYear-on-Year % ChangeYear-on-Year % Change

9.9

-12.6

-6.1

-15.2

-11.1

-6.5

-2.5

1.2 0.1

4.05.2

6.7

-20

-15

-10

-5

0

5

10

15

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Total: $173 BillionTotal: $173 Billion- 2.3%- 2.3%

Source: HKSAR, Census and Statistics DepartmentSource: HKSAR, Census and Statistics Department

2003 Annual Results Presentation2003 Annual Results PresentationAgendaAgenda

2003 Financial Results Highlights2003 Financial Results Highlights

2004 Outlook & Update2004 Outlook & Update

Questions & AnswersQuestions & Answers

2003 Financial Results Highlights2003 Financial Results HighlightsGroup TurnoverGroup Turnover

1,140.71,305.1

1,393.51,526.1

0

400

800

1,200

1,600

2,000H

K$

Mill

ion

2000 2001 2002 2003

No. of stores - HKNo. of stores - HK 123123 146146 166166 186186

No. of stores - ChinaNo. of stores - China -- -- 22 77

HK Retail SalesHK Retail Sales + 3.8%+ 3.8% - 1.2%- 1.2% - 4.1%- 4.1% - 2.3%- 2.3%

+ 9.5%+ 9.5%

2003 Financial Results Highlights2003 Financial Results HighlightsGroup Net ProfitGroup Net Profit

40.0

54.760.4 60.7

0

20

40

60

80

HK

$ M

illio

n

2000 2001 2002 2003

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

+ 0.5%+ 0.5%

*

**

Net Profit By MarketNet Profit By Market

20022002 20032003 ChangeChange

Hong Kong Market Hong Kong Market (HK$ Million)(HK$ Million) 61.661.6 69.269.2 7.67.6

China Market China Market (HK$ Million)(HK$ Million) (1.2)(1.2) (8.5)(8.5) (7.3)(7.3)

Total Total (HK$ Million)(HK$ Million) 60.460.4 60.760.7 0.30.3

2003 Financial Results Highlights2003 Financial Results HighlightsNet Profit as % of SalesNet Profit as % of Sales

3.5

4.24.3

4.0

3.0

3.5

4.0

4.5

5.0

% o

f S

ales

2000 2001 2002 2003

- 0.3%- 0.3%

*

**


Total 2003 Sales Increased Yet Total 2003 Sales Increased Yet Comparable Stores Sales DroppedComparable Stores Sales Dropped

8

-1.1

10

-0.6

10

-0.9

9

-1.6

-5

0

5

10

15

% C

ha

ng

e

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

Total Stores Comparable Stores

Total 2003Total 2003+ 9.5%+ 9.5%

Total 2003Total 2003- 1.1%- 1.1%

Slight Decline in Gross Margin / Slight Decline in Gross Margin / Other IncomeOther Income

31.0

31.6

32.8 32.6

29

30

31

32

33

34

% o

f S

ales

2000 2001 2002 2003

- 0.2%- 0.2%

Tight Control of Store Operating Tight Control of Store Operating ExpensesExpenses

8.7

6.9

6.4

8.6

6.9

6.7

8.9

6.9

6.9

9.1

7.0

7.2

0

5

10

15

20

25

30

% o

f S

ales

2000 2001 2002 2003

Labour Cost Rental Cost Other Expenses

22.022.0 22.222.2 22.722.7 23.323.3

2003 Financial Results Highlights2003 Financial Results HighlightsBasic Earnings Per ShareBasic Earnings Per Share

8.18.4

9.1 9.1

6

7

8

9

10

HK

Cen

ts

2000 2001 2002 2003

**

*


2003 Financial Results Highlights2003 Financial Results Highlights


Number of StoresNumber of Stores 168168 193193 + 25+ 25

Group Turnover Group Turnover (HK$ Million)(HK$ Million) 1,393.51,393.5 1,526.11,526.1 + 9.5%+ 9.5%

Group Net Profit Group Net Profit (HK$ Million)(HK$ Million) 60.4 *60.4 * 60.760.7 + 0.5%+ 0.5%

Net Profit as % of TurnoverNet Profit as % of Turnover 4.3% *4.3% * 4.0%4.0% - 0.3%- 0.3%

Basic Earnings Per ShareBasic Earnings Per Share 9.1 Cents *9.1 Cents * 9.1 Cents9.1 Cents --

Total Dividend Per ShareTotal Dividend Per Share Paid Mid YearPaid Mid Year To Be PaidTo Be Paid

-- 4 Cents4 Cents

1 Cent1 Cent

3 Cents3 Cents

+ 4 Cents+ 4 Cents


44thth Quarter 2003 Financial Results Quarter 2003 Financial Results HighlightsHighlights


Group Turnover Group Turnover (HK$ Million)(HK$ Million) 360.8360.8 394.0394.0 + 9.2%+ 9.2%

Group Net Profit Group Net Profit (HK$ Million)(HK$ Million) 17.1*17.1* 18.618.6 +9.1%+9.1%

Net Profit as % of TurnoverNet Profit as % of Turnover 4.7%*4.7%* 4.7%4.7% --

Basic Earnings Per ShareBasic Earnings Per Share 2.6 Cents*2.6 Cents* 2.8 Cents2.8 Cents + 0.2 Cent+ 0.2 Cent


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

49

2

28

-27

27 9

-30

-20

-10

0

10

20

30

% C

hang

e

Q12002

Q22002

Q32002

Q42002

Q12003

Q22003

Q32003

Q42003


**

*

*

2003 Achievements – Hong Kong2003 Achievements – Hong Kong

1.1. Excellence in Customer STF ServicesExcellence in Customer STF Services(Speed, Tidiness and Friendliness) (Speed, Tidiness and Friendliness)


2.2. Customization of Store TypesCustomization of Store Types Mega store with “Hot & In” counterMega store with “Hot & In” counter Mini storeMini store


3.3. Great Category Management InitiativesGreat Category Management Initiatives

Microwave Lunch BoxesPremiums Redemption

Weekend Specials

2003 Achievements2003 Achievements

Winner of “Winner of “Award for Excellence in Training Award for Excellence in Training

20032003” organized by The Hong Kong ” organized by The Hong Kong

Management Association – Management Association – Silver AwardSilver Award

Caring Company Award 2003/2004Caring Company Award 2003/2004

Selected as a Case Study for the Selected as a Case Study for the Citigroup Citigroup

International Case Competition 2003International Case Competition 2003 jointly jointly

organized with the HKUSTorganized with the HKUST

2003 Achievements2003 AchievementsRefining Store Model in ChinaRefining Store Model in China

Fresh and hot bakery and gourmet Fresh and hot bakery and gourmet

hot drinkshot drinks

STF&F (Speed, Tidiness, STF&F (Speed, Tidiness,

Friendliness & Fun)Friendliness & Fun)

76% preferred Circle K76% preferred Circle K

60 m60 m22 small store model small store model

Reduced CAPEX per store by Reduced CAPEX per store by

RMB200KRMB200K

Positive store contribution in Positive store contribution in

November and December 2003November and December 2003

2004 Update & Outlook2004 Update & Outlook

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

Overall consumer sentiment improvingOverall consumer sentiment improving

Deflation and high unemployment will continueDeflation and high unemployment will continue

Expect improvement in comparable store salesExpect improvement in comparable store sales

Our quality strategiesOur quality strategies Great customer experienceGreat customer experience Efficiency and cost controlEfficiency and cost control New product categoriesNew product categories Creative promotionsCreative promotions Quality and profitable new outlet growthQuality and profitable new outlet growth

210 stores by year-end210 stores by year-end

2004 Update & Outlook2004 Update & OutlookCircle K China – Aggressive GrowthCircle K China – Aggressive Growth

Differentiation and customer Differentiation and customer

preference strategiespreference strategies

Year of aggressive growthYear of aggressive growth

40 stores by end of the year in 40 stores by end of the year in

Southern ChinaSouthern China

Evaluate option of acquisitionEvaluate option of acquisition

Expansion to Northern or Expansion to Northern or

Eastern China marketEastern China market

2004 Update & Outlook2004 Update & OutlookTo SummarizeTo Summarize

Quality growth in Hong KongQuality growth in Hong Kong

Aggressive growth in ChinaAggressive growth in China

Building customer preference Building customer preference

is the keyis the key

Good balance between top line Good balance between top line

and profitabilityand profitability

Documents

2003 Annual Results Presentation