CTF Interim Results Presentation 2020/2021K-gold Jewellery Gold jewellery and products 1Q 2Q 3Q 4Q...

1 Core operating profit = Aggregate of adjusted gross profit and other income, less selling and distribution costs and general and administrative expenses2 An unrealised loss on gold loans of HK$517 million (1H2020: a loss of HK$917 million) was recorded in 1H2021

Revenue

million

Core operating profit 1

million

Basic EPS

1H2020

Profit attributable to shareholders 2

million

Dividend per share

Payout ratio

Same store sales

Mainland China Hong Kong and Macau

2

Other markets

Retail network

POS


Net openings

1 E-commerce, O2O distribution, CloudSales 365 and Cloud Kiosk included 2 RSV = Retail Sales Value measured the sales at the ending price (VAT inclusive, if any) of products sold to customers in the POS network and other channels3 RSV YoY change measured at constant exchange rates4 ASP = Average selling price Note: Data for retail network was as at 30 September 2020 3

1H2020

of gold jewellery and products RSV

CTF ‧ HUÁ Collection in Mainland China

ASP 4

Mainland China e-commerce and O2O related RSV 1,2

Contribution to respective

RSV Retail sales volume

T MARK Diamond

of diamond products RSV


Hong Kong and MacauMainland China

RSV

For the six months ended 30 September(HK$ m)

1H2019 1H2020 1H2021YoY

Change

Revenue 29,703 29,533 24,673 -16.5%

Contribution of gem-set / platinum / k-gold jewellery 1 29.6% 29.1% 30.1% +1.0% pts

Gross profit 8,529 8,147 8,143 0.0%

Gross profit margin 28.7% 27.6% 33.0% +5.4% pts

Adjusted gross profit margin 2 28.1% 30.7% 35.1% +4.4% pts

Selling and distribution costs and general and administrative expenses (“SG&A”)

5,517 5,750 4,928 -14.3%

SG&A to revenue ratio 18.6% 19.5% 20.0% +0.5% pts

Core operating profit 2,989 3,527 4,078 +15.6%

Core operating profit margin 10.1% 11.9% 16.5% +4.6% pts

Profit before taxation 2,722 2,200 3,284 +49.3%

Profit attributable to shareholders 1,936 1,533 2,232 +45.6%

Basic earnings per share HK$0.19 HK$0.15 HK$0.22 +45.6%

Dividend per share HK$0.15 HK$0.12 HK$0.16 N/A

1 Revenue from jewellery trading and service income from franchisees excluded2 Adjusted gross profit margin = Gross profit margin excluding the impact of the unrealised loss (gain) on gold loans

5

40.3% 39.6% 39.3%31.5%

14.0% -62.9%

59.7%60.4%

60.7%68.5%

86.0% 4.9%

21,526

24,754

29,703 29,533

24,673 -16.5%

1H2017 1H2018 1H2019 1H2020 1H2021

Mainland China Hong Kong, Macau and other markets

6.3% 6.7% 5.6% 6.4% 9.0% 17.0%

58.6%62.0%

64.8% 64.5%60.9% -21.2%

35.1%

31.3%

29.6% 29.1%

30.1% -14.0%

21,301

24,127

29,309 29,319

24,435 -16.7%

1H2017 1H2018 1H2019 1H2020 1H2021

Gem-set / Platinum / K-gold jewellery Gold jewellery and products

Watches

YoY ChangeYoY Change

Revenue by reportable segment (HK$ m) Revenue by product (HK$ m)(Excluding jewellery trading and service income)

6

-10.9%

-42.3%-35.0%

-65.0%

-75.5%

-52.5%

-24.3%

10.5%

-6.8%

2.3%

-49.5%

-11.2%

11.0% 12.0%

1H2020 1H2021

SSSG SSSG SSS volume growth

Mainland China 1.8% -0.2% -15.4%

Hong Kong and Macau -27.5% -65.7% -66.9%


7

1Q 4Q 1Q2Q 3Q

FY2020 FY2021

3QTD(1 Oct-18 Nov 20)

2Q

-11.6%

-47.8%

-26.8%

-66.2%

-82.9%

-64.5%

-49.5%

-15.2% -37.1%

-56.1%-66.8%

-65.7%

-37.0%

39.1%

14.7%

-11.7%

2.5%

-51.0%

-19.8%

6.7%13.3%

3.0%-3.0% 0.9%

-49.2%

-6.6% 2.5%

-6.2%

SSSG – Mainland China SSSG – Hong Kong and Macau

Gem-set / Platinum / K-gold Jewellery

Gold jewellery and products

8

1Q 2Q 3Q 4Q 1Q 2Q

FY2020 FY2021


Gem-set / Platinum / K-gold Jewellery

Gold jewellery and products

1Q 2Q 3Q 4Q 1Q 2Q

FY2020 FY2021


Same store ASP 1 (HK$) 1H2020 1H2021

Gem-set jewellery 6,200 6,400

Gold jewellery and products 4,000 4,700

Same store ASP 1 (HK$) 1H2020 1H2021

Gem-set jewellery 11,000 13,400

Gold jewellery and products 6,700 5,800

1 Average selling price on 1H2021 same store basis, was rounded to the nearest hundred HK dollar and measured at constant exchange rates; Value-added tax (VAT) in Mainland China included

11.4%14.1%

19.1%18.9% 18.4%

16.5%

29.7%31.9%

34.6%

1H2019 1H2020 1H2021

7.9% 7.4%0.8%

18.1%21.8%

41.6%

25.5%28.1%

38.1%

1H2019 1H2020 1H2021

Core operating profit margin

Adjusted gross profit margin SG&A ratio

Core operating profit YoY 1H2020 1H2021

Mainland China 37.8% 42.5%

Hong Kong, Macau and other markets

-26.1% -95.9%

Core operating profit by reportable segment (HK$ m) Profitability – Mainland China

Core operating profit marginAdjusted gross profit margin SG&A ratio

Profitability – Hong Kong, Macau and other markets

9

2,062

2,843

4,050

926 685

28

1H2019 1H2020 1H2021

Mainland China

Hong Kong, Macau and other markets

893 3.0% 840 2.8% 643 2.6% -23.4%

138 0.5% 287 1.0%214 0.9% -25.5%

313 1.1% 271 0.9%156 0.6% -42.5%

413 1.4% 442 3.7%

502 4.3% -0.6%

636

570 769 2.6%

118 0.4%

92 0.4% -22.2%

860 2.9% 866 2.9%

792 3.2% -8.5%

2,131 7.2%2,291 7.8%

1,961 7.9% -14.4%

5,517 5,750

4,928 -14.3%

1H2019 1H2020 1H2021

18.6%19.5% 20.0%

%

%

YoY Change

%

1 Adoption of IFRS 16 Leases for the first time in 1H2020, prior-period comparative financial information is not restated

1

As a % of revenue

Concessionaire fees

Rental expenses

Depreciation and amortisation(Right-of-use assets, “ROUA”)

Packaging materials

Staff costs and related expenses

Depreciation and amortisation(Property, plant and equipment)

Other SG&A

Advertising and promotion expenses

1

10

6.5% 6.8% 6.6% -33.5%

54.0% 53.6%65.0% -17.4%

39.5% 39.6%

28.3% -51.4%

725 719

489 -32.0%

1H2019 1H2020 1H2021

Variable staff costs

Fixed staff costs

Other staff related expenses

As a % of respective revenue

6.7% 8.4%

16.0%

3.6% 3.3% 3.4% -1.6%

63.5% 60.6%54.7% -13.8%

32.8%36.2%

41.9% 10.4%

1,303

1,476 1,408 -4.7%

1H2019 1H2020 1H2021

Variable staff costs

Fixed staff costs

Other staff related expenses


7.2% 7.3%6.6%

1H2021 Average no. of employees 1

20,370-3.0% YoY

3,130-4.3% YoY

1H2021 Average no. of employees 1

YoY ChangeYoY Change

1 Employees in production function excluded


11

5.2% 6.2%

13.6%

0.0% 3.8% 3.4%0.0%

89.2%

86.4%

100.0%

7.0%

10.2%

575 561

440

1H2019 1H2020 1H2021

Rental expenses Depreciation and amortisation (ROUA) Finance costs on leases As a % of respective revenue

8.6% 8.7%8.2%

853 865

792

1H2019 1H2020 1H2021

YoY Change

-8.5%

-21.5%

YoY Change


Concessionaire fees


1 Adoption of IFRS 16 Leases for the first time in 1H2020, prior-period comparative financial information is not restated

Pre-IFRS 16 Post-IFRS 16

1

12

1

1,533

69.6%15.6%

17.5% 15.9%24.1%

17.1%

2,232

1H2020 1H2021

13

Foreign exchange difference

Changes in gross profit margin by product in retail business

Taxation

Other movements

One-off subsidies and rent concession

Impairment on assets

Profit attributable to shareholders+45.6% YoY

68 84 108

294297

370

362381

478

1H2020 FY2020 1H2021

Finished goods

Raw materials

1,591 3.8% 1,639 3.9% 1,642 3.8%

16,196 38.3% 17,078 40.3% 18,453 42.8%

24,536 58.0% 23,626 55.8% 23,051 53.4%

42,323 42,343 43,146

1H2020 FY2020 1H2021

Gem-set / Platinum / K-gold jewellery Gold jewellery and products Watches

1 Packaging materials excluded2 Inventory turnover period = Closing inventory balances (excluding packaging materials) / cost of goods sold x 183 (for 1H figures) 366 (for FY figures)

% %

Inventory balances by product 1 (HK$ m) Inventory turnover period by category 2 (day)

%

14

7339 24

47

48 31

299 322

262

109

35

35

528

444

352

1H2019 1H2020 1H2021

Projects

POS

Productions

Offices

46 18 25

148

49 31

334

378

296

528

444

352

1H2019 1H2020 1H2021

Furniture, fixtures and equipment & leasehold improvements

Land and buildings & construction in progress

Plant and machinery & motor vehicles

Capex by nature Capex by function

15

(HK$ m)As at

31 Mar 20% to total

equityAs at

30 Sep 20% to total

EquityIncrease/

(decrease)

Non-current assets 10,038 37.2% 9,359 32.7% (679)

Inventories 42,538 157.6% 43,410 151.5% 872

Cash and cash equivalents 1 7,219 26.7% 7,333 25.6% 114

Total borrowings 22,711 84.1% 19,866 69.3% (2,845)

Bank borrowings 11,431 42.3% 9,326 32.5% (2,105)

Gold loans 11,280 41.8% 10,540 36.8% (740)

Net debt 2 15,492 57.4% 12,533 43.7% (2,959)

Net current assets 19,579 72.5% 23,397 81.6% 3,818

Total equity 26,991 100% 28,657 100% 1,666

1 Bank balances and cash equivalents included 2 Aggregate of bank borrowings, gold loans, net of cash and cash equivalents

16

1 With adoption of IFRS 16, leases paid was included in financing activities2 Net cash used in inventories included net change in inventories, gold loan raised and repayment of gold loans

7,219

6,207 6422,379

597 352 2,106

1,235

24 7,333

FY2020(31 Mar 20)

1H2021(30 Sep 20)

Net cash used in inventories 2

Operating cash flows before movements in working capital

Net cash from other operating activities

Capital expenditure

Net decrease in bank borrowings

Dividends paid

Bank balances and cash

Bank balances and cash

Pro forma free cash flows3,431

Leases paid 1

Other movements

17

POS movement by store brand 1

1H2020 FY2020 Addition Reduction Net 1H2021

CHOW TAI FOOK JEWELLERY 2 3,140 3,429 388 (102) 286 3,715

HEARTS ON FIRE 1 1 – – – 1

ENZO – 59 10 (4) 6 65

SOINLOVE 36 43 9 (4) 5 48

MONOLOGUE 48 51 20 (4) 16 67

1 Shop-in-shop and counter-in-shop excluded2 CTF WATCH POS excluded

19

Mainland China

POS

51.5%

48.5%

41.9%

46.1%

11.9%

39.5%

42.7%

17.8%

39.0%

61.0%

16.8%

48.8%

18.0%

16.4%

12.1%

42.4%22.1%

23.5%

% of % of POS RSV

Tier I cities

Tier II cities

Tier III cities

Tier IV cities and others

% of % of POS RSV

Shopping mall

Department store

Others

RSV and POS by operation model RSV and POS by tier of cities

% of % of POS RSV

Self-operated

Franchised

RSV and POS by store format

RSV YoYNet POS

movement

Tier I cities 7.7% +38

Tier II cities 5.6% +103

Tier III cities 8.0% +75

Tier IV cities and others

12.5% +70

RSV YoYNet POS

movement

Self-operated -6.0% -45

Franchised 26.7% +331

RSV YoYNet POS

movement

Shopping mall 16.7% +118

Department store

-4.7% +44

Others 36.5% +124

20

Retail network management

21

Foshan, Guangdong Province

(廣東省佛山市 )

Shenzhen, Guangdong Province

(廣東省深圳市)

Offer curated experience in Tier I and II

cities

Continue to expand presence in lower

tier or county level cities through

franchisees

Net openings of 286 CHOW TAI FOOK

JEWELLERY POS in 1HFY2021

FY2021 net openings of ~450-500 POS

POS

Hong Kong and Macau

Other Markets

POS

POS movement by store brand 1

1H2020 FY2020 Addition Reduction Net 1H2021

CHOW TAI FOOK JEWELLERY

140 138 2 (8) (6) 132

Hong Kong, China 86 83 1 (5) (4) 79

Macau, China 17 18 – – – 18

Other markets 37 37 1 (3) (2) 35

HEARTS ON FIRE 11 10 – (1) (1) 9

SOINLOVE – 1 – – – 1

MONOLOGUE 1 2 – – – 2

1 Shop-in-shop and counter-in-shop excluded

22

87.4%

6.1%6.5%

56.9%

12.5%

30.6%

23

RSV YoYNet POS

movement

Hong Kong -56.5% -5

Macau -86.7% -

Other markets -44.2% -2

Hong Kong and MacauRSV settled by

China UnionPay, Alipay, WeChat Pay or RMB

(1H2020: 39.7%)

% of % of POS RSV

Hong Kong

Macau

Other markets

Russell Street, Causeway Bay

5 net closings in 1HFY2021 with closures

mainly in touristic area

A net closure of 5 POS expected in FY2021

Hong Kong and Macau

Other markets

Retail network management

2 net closings in 1HFY2021

Explore opportunities in Southeast Asia when

international travel resumes

RSV and POS by geography

CloudSales 365

Cloud Kiosk

Social Shopping

Livestreaming

C2M

Intellectual Property

Design Platform

OEM / ODM

25

Production, Logistics and Distribution

Data, IT Systems and Infrastructure

Intellectual Capital and Corporate Culture

Retail-driven Sector Digital Empowerment Sector Co-opetition Sector

26

MONOLOGUE

Stylish fashion jewelleryfor young generation

Flagship Brand

Individual Brands

SOINLOVE

Affordable luxury jewellery brand for

young romantic ladies

CHOW TAI FOOK JEWELLERY

An iconic jewellery brand renowned for its trustworthiness and authenticity with different store series

HEARTS ONFIRE

US premium diamond brand

with exquisite cutting

craftsmanship

ENZO

Creative and contemporarycoloured gem jewellerybrand

27

1H2020of gold jewellery and products RSV

CTF ‧ HUÁ Collection in Mainland China

ASP

T MARK Diamond



YoY YoY


RSV

Marketing campaign featuring celebrities

IMPERIAL JADE ‧ HUÁ CollectionCTF ‧ HUÁ Collection

28

HEARTS ON FIRE

ENZO

Rainbow Bouquet Collection



YoY YoY


RSV

POS

Mainland China

Promote its brands and products in all channels

Explore opportunities in Tier I and II cities

LORELEI REVERIE Collection

29

A net of 5 POS were opened in 1HFY2021

A net of 16 POS were opened in 1HFY2021

SOINLOVE

MONOLOGUE

Monogold Collection

Gold Sweeties Pink Collection

POS

Mainland China

POS

Hong Kong and Macau

POS

Mainland China

POS

Hong Kong and Macau

MONOLOGUE Angel Party

Fairy Star Collection

30

Cloud Kiosk

CloudSales 365

ASP

Customers connected

spots

ASP

Installed in

31

E-commerce and O2O related RSV

YoY

Contribution to respective retail sales volume

ASP

1H2020

E-commerce O2O related

Contribution to respective RSV

E-commerce O2O related

32

Mainland China

Members as at 30 September 2020

Repeat purchase as a % of respective RSV in 1H2021

Hong Kong and Macau

Members as at 30 September 2020

Repeat purchase as a % of respective RSV in 1H2021

Market outlook

Mainland China

• Stay optimistic about the mid-to long-term prospects of the jewellery market in Mainland China

Hong Kong and Macau

• Believe domestic market has bottomed out

• When the major border crossings reopen, the visitation and retail market would recover gradually

Strategies

Mainland China

• Continue market expansion strategy through franchise model

• Develop online-offline channel integration to take advantage of digital trends

• Better serve each unique customer segment through differentiation strategy

Hong Kong and Macau

• Enhance operational efficiency and refine business strategies

34

Jewellery ecosystem

Market leader

Operational efficiency

Tech-savvy jewellery company

Dual Force Strategy to enable our customers to experience a blissful fulfillment through jewellery

35

Base inventory

20,000 KG.

Seasonal, consigned

inventory & others

20,000 KG.

Base inventory

20,000 KG.

Seasonal, consigned

inventory & others

30,000 KG.

Period 0 Period 1(Peak season)

Gold inventory(Weight)

Hedging ratio:50%

Hedging ratio:60%

Note: Data provided are for illustrative purpose only

39

Gold product value at US$1,600/oz

Gold price increaseto US$1,900/oz

Increasing gold price to US$1,900/oz

US$300/oz

Gold loan contractat US$1,600/oz

Gold price increase Loss in gold loan contracts

Gain in sale of gold products

Loss in the settlement or revaluation

of gold loan contracts


Gold price increase to US$1,900/oz

Increasing gold price to US$1,900/oz

US$300/oz


OFFSET

US$(300)/oz

100% hedged

0% hedged

Note: Data provided are for illustrative purpose only

40

Hedged gold products


Gold price increase to US$1,900/oz

Sale of gold products at market price

US$1,900/oz

Gold loan contractat US$1,600/oz

US$300/oz

Gold price increase Loss in gold loan contracts

Loss in the settlement or revaluation

of gold loan contracts

US$(300)/oz

Gold inventory value at US$1,600/oz

IF SOLD

IF NOT YET

SOLD Unrealised loss on gold loan contracts

US$(300)/oz

US$(300)/oz

Realised loss on gold loan contracts


These materials have been prepared by Chow Tai Fook Jewellery Group Limited (the “Company”) solely for use at this presentation and are not forpublic dissemination.

The slides and any other materials used in this presentation are the property of the Company and must be treated as such. The informationcontained in this presentation is being furnished to you solely for your information and may not be forwarded, published or distributed, directly orindirectly, to any other person (whether within or outside your organisation/firm), in whole or in part, for any purpose and may not be reproduced inany manner whatsoever. Any forwarding, publication, distribution or reproduction of this document in whole or in part is unauthorised.

The information contained in this presentation does not constitute or form part of any offer for sale or subscription of or solicitation or invitation ofany offer to buy or subscribe for any securities or other interests of the Company or its holding Company or any of its subsidiaries in any jurisdictionor an inducement to enter into any investment activity, nor shall it or any part of it form the basis of or be relied on in connection with any contracts,commitment or investment decision whatsoever.

This presentation contains forward-looking statements. Such forward-looking statements are based on a number of assumptions about theoperations of the Company and other factors, many of which may be beyond the Company’s control. By their nature, forward-looking statementsinvolve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Accordingly, theCompany’s actual results may differ materially from those expressed or implied by such forward-looking statements. The Company has no obligationand does not undertake to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Theinformation contained in this presentation has been compiled as of the date of this presentation, speaks as of the date of this presentation (or earlier,if so indicated) and will not be updated to reflect material developments which may occur after the date of this presentation, and is subject to change,including substantial changes, without notice.

This presentation may include measures of financial performance which are not a measure of financial performance under IFRS, such as “Coreoperating profit”. These measures are presented because the Company believes they are useful measures to determine the Company’s operatingcash flow and historical ability to meet debt service and capital expenditure requirements. “Core operating profit” should not be considered as analternative to cash flows from operating activities, a measure of liquidity or an alternative to net profit or indicators of the Company’s operatingperformance on any other measure of performance derived in accordance with IFRS. Because it is not an IFRS measure, “Core operating profit” maynot be comparable to similarly titled measures presented by other companies.

The information contained in this presentation has not been independently verified. No representation, warranty, or undertaking express or implied,is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of any information or opinion containedherein. It is not the intention to provide, and you may not rely on this document as providing, a complete or comprehensive analysis of the Company’sfinancial or trading position or prospects. None of the Company or any of its directors, officers, employees, agents, shareholders, affiliates, subsidiary,advisors or representatives shall be in any way responsible for the contents hereof, or shall be liable (in negligence or otherwise) for any losshowsoever arising from any use of this document or the information contained in this presentation or otherwise arising in connection therewith.

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CTF Interim Results Presentation 2020/2021K-gold Jewellery Gold jewellery and products 1Q 2Q 3Q 4Q...

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