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%
*
**
* 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)
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
**
*
* 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)
2003 Financial Results Highlights2003 Financial Results Highlights
20022002 20032003 ChangeChange
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
* 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)
44thth Quarter 2003 Financial Results Quarter 2003 Financial Results HighlightsHighlights
20022002 20032003 ChangeChange
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
* 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)
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
* 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)
**
*
*
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)
2003 Achievements – Hong Kong2003 Achievements – Hong Kong
2.2. Customization of Store TypesCustomization of Store Types Mega store with “Hot & In” counterMega store with “Hot & In” counter Mini storeMini store
2003 Achievements – Hong Kong2003 Achievements – Hong Kong
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
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