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2003 Annual Results Presentation. A member of the Li & Fung (Retailing) Group. 3 March 2004. 2003 Hong Kong Retail Sales Value Year-on-Year % Change. Total: $173 Billion - 2.3%. Source: HKSAR, Census and Statistics Department. 2003 Annual Results Presentation Agenda.
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2003 Annual Results Presentation A member of the Li & Fung (Retailing) Group 3 March 2004
2003 Hong Kong Retail Sales ValueYear-on-Year % Change Total: $173 Billion - 2.3% Source: HKSAR, Census and Statistics Department
2003 Annual Results PresentationAgenda • 2003 Financial Results Highlights • 2004 Outlook & Update • Questions & Answers
2003 Financial Results HighlightsGroup Net Profit + 0.5% * * * * Restated for income tax effect per SSAP No.12 (revised) and long service payment costs per SSAP No.34 (revised)
2003 Financial Results HighlightsNet Profit as % of Sales - 0.3% * * * * 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 Comparable Stores Sales Dropped Total 2003 + 9.5% Total 2003 - 1.1%
Tight Control of Store Operating Expenses 23.3 22.7 22.0 22.2
2003 Financial Results HighlightsBasic Earnings Per Share * * * * Restated for income tax effect per SSAP No.12 (revised) and long service payment costs per SSAP No.34 (revised)
2003 Financial Results Highlights * Restated for income tax effect per SSAP No.12 (revised) and long service payment costs per SSAP No.34 (revised)
4th Quarter 2003 Financial Results Highlights * 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 Growth * * * * * Restated for income tax effect per SSAP No.12 (revised) and long service payment costs per SSAP No.34 (revised)
2003 Achievements – Hong Kong • Excellence in Customer STF Services (Speed, Tidiness and Friendliness)
2003 Achievements – Hong Kong 2. Customization of Store Types • Mega store with “Hot & In” counter • Mini store
Weekend Specials Microwave Lunch Boxes Premiums Redemption 2003 Achievements – Hong Kong 3. Great Category Management Initiatives
2003 Achievements Winner of “Award for Excellence in Training 2003” organized by The Hong Kong Management Association – Silver Award Selected as a Case Study for the Citigroup International Case Competition 2003 jointly organized with the HKUST Caring Company Award 2003/2004
2003 AchievementsRefining Store Model in China • Fresh and hot bakery and gourmet hot drinks • STF&F (Speed, Tidiness, Friendliness & Fun) • 76% preferred Circle K • 60 m2 small store model • Reduced CAPEX per store by RMB200K • Positive store contribution in November and December 2003
2004 Update & OutlookCircle K Hong Kong – Quality Growth • Overall consumer sentiment improving • Deflation and high unemployment will continue • Expect improvement in comparable store sales • Our quality strategies • Great customer experience • Efficiency and cost control • New product categories • Creative promotions • Quality and profitable new outlet growth • 210 stores by year-end
2004 Update & OutlookCircle K China – Aggressive Growth • Differentiation and customer preference strategies • Year of aggressive growth • 40 stores by end of the year in Southern China • Evaluate option of acquisition • Expansion to Northern or Eastern China market
2004 Update & OutlookTo Summarize • Quality growth in Hong Kong • Aggressive growth in China • Building customer preference is the key • Good balance between top line and profitability