A member of the Li & Fung (Retailing) Group 3 March 2005 2004 Annual Results Presentation.
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Transcript of A member of the Li & Fung (Retailing) Group 3 March 2005 2004 Annual Results Presentation.
A member of the Li & Fung (Retailing) GroupA member of the Li & Fung (Retailing) Group 3 March 20053 March 2005
2004 Annual Results 2004 Annual Results PresentationPresentation
2004 Hong Kong Retail Sales Value2004 Hong Kong Retail Sales ValueYear-on-year % ChangeYear-on-year % Change
4.2
13.1
9.3
23.0
19.5
14.6
11.1
5.7
8.7 8.67.4
8.7
0
5
10
15
20
25
%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2004 Total : + 10.8%
Source: Census and Statistics Department, HKSARSource: Census and Statistics Department, HKSAR
2004 Guangzhou Retail Sales Value 2004 Guangzhou Retail Sales Value Year-on-year % ChangeYear-on-year % Change
11.0
9.0
14.215.8
13.612.4
13.2
9.0
12.911.4
13.2
11.2
0
5
10
15
20
%
Jan Feb Mar Apr Mau Jun Jul Aug Sep Oct Nov Dec
2004 Total : + 12%
Source: Bureau of Statistics, Guangzhou
2004 Annual Result Presentation2004 Annual Result PresentationAgendaAgenda
2004 Financial Results Highlights2004 Financial Results Highlights
2005 Update & Outlook2005 Update & Outlook
Questions & AnswersQuestions & Answers
2004 Financial Results Highlights2004 Financial Results HighlightsGroup TurnoverGroup Turnover
1,305.11,393.5
1,526.1
1,757.6
0
500
1,000
1,500
2,000
HK
$ M
illio
n
2001 2002 2003 2004
No. of store – HKNo. of store – HK 146146 166166 186186 205205
No. of store - ChinaNo. of store - China -- 22 77 2020
+ 15.2 %
2004 Financial Results Highlights2004 Financial Results HighlightsGroup Net ProfitGroup Net Profit
54.760.4 60.7
67.0
0
10
20
30
40
50
60
70
80
HK
$ M
illio
n
2001 2002 2003 2004
+ 10.3%
**
* 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)
2004 Financial Results Highlights2004 Financial Results HighlightsNet Profit as % of TurnoverNet Profit as % of Turnover
4.24.3
4.0
3.8
3.0
3.5
4.0
4.5
5.0
% o
f S
ales
2001 2002 2003 2004
- 0.2%
*
* 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)
*
8.49.1 9.1
10.0
0
2
4
6
8
10
12
HK
Cen
ts
2001 2002 2003 2004
2004 Financial Results Highlights2004 Financial Results HighlightsBasic Earnings Per ShareBasic Earnings Per Share
* 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)
**
+ 0.9 Cent
2004 Financial Results Highlights2004 Financial Results HighlightsGross Margin / Other Income*Gross Margin / Other Income*
31.6
32.832.6
33.1
30.0
31.0
32.0
33.0
34.0
% o
f S
ales
2001 2002 2003 2004
+ 0.5%
* Exclude Interest Income* Exclude Interest Income
2004 Financial Results Highlights2004 Financial Results HighlightsStore Operating ExpensesStore Operating Expenses
8.5
6.9
6.7
8.9
6.9
6.9
9.1
7.0
7.2
9.1
7.2
7.7
0
5
10
15
20
25
30
% o
f S
ale
s
2001 2002 2003 2004
Labour Cost Rental Cost Other Expenses
22.123.322.7
24.0
2004 Advertising & Promotions2004 Advertising & Promotions
Lucky Star PromotionLucky Star Promotion
Bidding PromotionBidding Promotion
OK200 PromotionOK200 Promotion
Kung Fu PromotionKung Fu Promotion
2004 Achievements2004 Achievements
Customers Satisfaction to Circle K's Service
Not Satisfied2.2%
MoreSatisfied62.1%
Did Not Vote35.7%
Total Distribution: 1,112,000 Tickets
Period of Voting: 1 - 7 November 2004Period of Voting: 1 - 7 November 2004
2004 Achievements2004 Achievements
Caring Company Award 2004/2005Caring Company Award 2004/2005
Good People Management Award 2004 by Good People Management Award 2004 by
Labour DepartmentLabour Department
Service Category Leader of Supermarket / Service Category Leader of Supermarket /
Convenience Stores Category (March – May 2004) Convenience Stores Category (March – May 2004)
of HKRMA Mystery Shoppers Programmeof HKRMA Mystery Shoppers Programme
Bronze Award of Good Housekeeping Plan 2004 Bronze Award of Good Housekeeping Plan 2004
by Occupational Safety & Health Councilby Occupational Safety & Health Council
2004 Financial Results Highlights2004 Financial Results Highlights
20032003 20042004 ChangeChange
Number of StoresNumber of Stores 193193 225225 + 32+ 32
Group Turnover (HK$ M)Group Turnover (HK$ M) 1,526.11,526.1 1,757.61,757.6 + 15.2%+ 15.2%
Group Net Profit (HK$ M)Group Net Profit (HK$ M) 60.760.7 67.067.0 + 10.3%+ 10.3%
Net Profit as % of TurnoverNet Profit as % of Turnover 4.0%4.0% 3.8%3.8% - 0.2%- 0.2%
Basic Earnings Per ShareBasic Earnings Per Share 9.1 Cents9.1 Cents 10 Cents10 Cents + 0.9 Cent+ 0.9 Cent
Total Dividend Per ShareTotal Dividend Per Share 4 Cents4 Cents 5 Cents5 Cents + 1 Cent+ 1 Cent Paid Mid YearPaid Mid Year 1 Cent1 Cent 1.25 Cents1.25 Cents
To Be PaidTo Be Paid 3 Cents3 Cents 3.75 Cents3.75 Cents
2005 Update & Outlook2005 Update & Outlook
2005 Hong Kong Retail Environment2005 Hong Kong Retail Environment
Gradual improvement in local consumers’ spendingGradual improvement in local consumers’ spending
Increasing competitionIncreasing competition
Increasing rental cost pressureIncreasing rental cost pressure
Hong Kong Market – Key StrategiesHong Kong Market – Key Strategies
1.1. Build competitive edge & store networkBuild competitive edge & store network
2.2. Efficiency and effectiveness of supply chainEfficiency and effectiveness of supply chain
3.3. Pillars to support China growthPillars to support China growth
4.4. 245 stores, $2.0 billion sales, $48 million capex245 stores, $2.0 billion sales, $48 million capex
Pearl River DeltaPearl River Delta2005 Retail Environment2005 Retail Environment
Income per capita and savings continue to increaseIncome per capita and savings continue to increase
Inflation will continue to be driven by the pricing of Inflation will continue to be driven by the pricing of
primary materials, energy and logisticsprimary materials, energy and logistics
Growth in internal consumption will remain healthyGrowth in internal consumption will remain healthy
Stable rental but upward pressure on labour and Stable rental but upward pressure on labour and
utility costsutility costs
China Market – Key StrategiesChina Market – Key Strategies
1.1. Major change in strategy – building store network as top Major change in strategy – building store network as top
priority and taking the riskpriority and taking the risk
2.2. Dual brand, multiple cities within the Pearl River Delta to Dual brand, multiple cities within the Pearl River Delta to
expedite growthexpedite growth
3.3. Focus on Pearl River Delta before expanding to other regFocus on Pearl River Delta before expanding to other reg
ionsions
4.4. Aggressively look for non-organic growth opportunities in Aggressively look for non-organic growth opportunities in
Southern China market and other regionsSouthern China market and other regions
5.5. 80 stores, $100 million sales, $35 million capex80 stores, $100 million sales, $35 million capex
Dongguan Sun-High Convenience StoDongguan Sun-High Convenience Store Chainre Chain
A chain of about 80 franchised convenience stores in DongguanA chain of about 80 franchised convenience stores in Dongguan
Annualized sales of about RMB80 millionAnnualized sales of about RMB80 million
Signed investment agreementSigned investment agreement
CRA owns 60% of enlarged capitalCRA owns 60% of enlarged capital
Conditional on obtaining government approvalConditional on obtaining government approval
Certain conditions to be fulfilled by existing shareholdersCertain conditions to be fulfilled by existing shareholders
Shorten learning curve on franchising in ChinaShorten learning curve on franchising in China
Additional brand to speed up network expansionAdditional brand to speed up network expansion
Little impact on 2005 profitability or cash flowLittle impact on 2005 profitability or cash flow
2005 Update & Outlook2005 Update & OutlookTo SummarizeTo Summarize
1.1. Better consumer spending but upward pressure on Better consumer spending but upward pressure on
operating expenses in HKoperating expenses in HK
2.2. Change strategies for establishing market leadership in Change strategies for establishing market leadership in
Southern ChinaSouthern China Accept the riskAccept the risk Fast growth of store networkFast growth of store network Invest in infra-structure support & operating lossInvest in infra-structure support & operating loss
3.3. Continue to evaluate non-organic growth opportunitiesContinue to evaluate non-organic growth opportunities