3 rd Quarter 2003 Results Presentation A member of the Li & Fung (Retailing) Group 4 November 2003

33rdrd Quarter 2003 Quarter 2003 Results PresentationResults Presentation

A member of the Li & Fung (Retailing) GroupA member of the Li & Fung (Retailing) Group 4 November 20034 November 2003

Hong Kong Total Retail Sales ValueHong Kong Total Retail Sales ValueYear-on-year % ChangeYear-on-year % Change

-20%

-15%

-10%

-5%

0%

5%

10%

01

/02

03

/02

05

/02

07

/02

09

/02

11

/02

01

/03

03

/03

05

/03

07

/03

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

Jan-Aug 2003 :Jan-Aug 2003 : - 5%- 5%

2002 Total :2002 Total : - 4%- 4%

33rdrd Quarter 2003 Result Presentation Quarter 2003 Result Presentation AgendaAgenda

33rdrd Quarter 2003 Financial Results Highlights Quarter 2003 Financial Results Highlights

2003 Update & Outlook2003 Update & Outlook

Questions & AnswersQuestions & Answers

33rdrd Quarter 2003 Financial Results Highlights Quarter 2003 Financial Results HighlightsGroup Turnover – 3Group Turnover – 3rdrd Quarter Quarter

1,305.11,393.5

366.8 404.9

0

200

400

600

800

1,000

1,200

1,400

1,600

HK

$ M

illio

n

2001 Total 2002 Total 3rd Qtr 2002 3rd Qtr 2003

No. of Stores :No. of Stores : 146146 166 166 157 157 180 (HK) 180 (HK) -- 2 2 - - 5 (Chin 5 (Chin

a)a)

+ 10%+ 10%

33rdrd Quarter 2003 Financial Results Highlights Quarter 2003 Financial Results Highlights144 Comparable Stores Sales144 Comparable Stores Sales

344.5340.7

300

310

320

330

340

350

360

HK

$ M

illio

n

3rd Qtr 2002 3rd Qtr 2003

- 1%- 1%

33rdrd Quarter 2003 Financial Results Highlights Quarter 2003 Financial Results HighlightsGroup Turnover – September YTDGroup Turnover – September YTD

1,305.11,393.5

322.6

343.4

366.8

349.6

377.6

404.9

0

200

400

600

800

1,000

1,200

1,400

1,600

HK

$ M

illio

n

2001 Total 2002 Total Sep YTD 2002 Sep YTD 2003

No. of Stores :No. of Stores : 146146 166 166 157 180 (HK) 157 180 (HK) -- 2 2 - - 5 (Chin 5 (Chin

a)a)

+ 10%+ 10%

1,032.81,132.1

55.060.5

17.1 18.2

0

10

20

30

40

50

60

70

HK

$ M

illio

n


33rdrd Quarter 2003 Financial Results Highlights Quarter 2003 Financial Results HighlightsGroup Net Profit – 3Group Net Profit – 3rdrd Quarter Quarter

+ 6%+ 6%

* Restated for Income Tax Effect Per SSAP No.12* Restated for Income Tax Effect Per SSAP No.12

****

**

4.2% 4.3%4.7% 4.5%

0%

1%

2%

3%

4%

5%

6%

7%


33rdrd Quarter 2003 Financial Results Highlights Quarter 2003 Financial Results HighlightsNet Profit as % of Sales – 3Net Profit as % of Sales – 3rdrd Quarter Quarter

- 0.2%- 0.2%


****

**

31.6%

32.8%

32.3%

32.9%

30%

31%

32%

33%

34%


Gross Margin/Other Income as % of Sales(Excluding Interest)

Why 3Why 3rdrd Quarter 2003 Results? Quarter 2003 Results?Higher Gross Margin/Other IncomeHigher Gross Margin/Other Income

+ 0.6%+ 0.6%

Why 3Why 3rdrd Quarter 2003 Results? Quarter 2003 Results?Higher Expenses as % of SalesHigher Expenses as % of Sales

Expenses as % of SalesExpenses as % of Sales 20032003 2003 vs. 20022003 vs. 2002

Store Operating Expenses - HKStore Operating Expenses - HK 22.3%22.3% + 0.3%+ 0.3%

- China- China 0.3%0.3% + 0.3%+ 0.3%

DistributionDistribution 1.7%1.7% + 0.2%+ 0.2%

Administrative ExpensesAdministrative Expenses 3.7%3.7% + 0.5%+ 0.5%

China Start-up ExpensesChina Start-up Expenses -- - 0.4%- 0.4%

+ 0.9 %+ 0.9 %

Why 3Why 3rdrd Quarter 2003 Results? Quarter 2003 Results?Net Profit By MarketNet Profit By Market

33rdrd Qtr 2002 Qtr 2002 33rdrd Qtr 2003 Qtr 2003 ChangesChanges

(HK$ M)(HK$ M) (HK$ M)(HK$ M) (HK$ M)(HK$ M)

Hong Kong MarketHong Kong Market 18.718.7 20.420.4 1.71.7

China MarketChina Market (1.6)(1.6) (2.2)(2.2) (0.6)(0.6)

TotalTotal 17.117.1 18.218.2 1.11.1

55.060.5

9.9

16.3

17.1

7.3

16.6

18.2

0

10

20

30

40

50

60

70

HK

$ M

illio

n


33rdrd Quarter 2003 Financial Results Highlights Quarter 2003 Financial Results HighlightsGroup Net Profit – September YTDGroup Net Profit – September YTD

- 3%- 3%


****

43.3 42.1**

4.2% 4.3% 4.2%3.7%

0%

1%

2%

3%

4%

5%

6%

7%


33rdrd Quarter 2003 Financial Results Highlights Quarter 2003 Financial Results HighlightsNet Profit as % of Sales – September YTDNet Profit as % of Sales – September YTD

- 0.5%- 0.5%


** ****

8.59.1

2.6 2.7

0

1

2

3

4

5

6

7

8

9

10

HK

Cen

ts


33rdrd Quarter 2003 Financial Results Highlights Quarter 2003 Financial Results HighlightsBasic Earnings Per Share – 3Basic Earnings Per Share – 3rdrd Quarter Quarter


****

**

+ 0.1 Cent+ 0.1 Cent

8.59.1

6.5 6.3

0

1

2

3

4

5

6

7

8

9

10

HK

Cen

ts


33rdrd Quarter 2003 Financial Results Highlights Quarter 2003 Financial Results HighlightsBasic Earnings Per Share – September YTDBasic Earnings Per Share – September YTD

- 0.2 Cent- 0.2 Cent


** **

**

33rdrd Quarter 2003 Financial Results Highlights Quarter 2003 Financial Results Highlights

33rdrd Qtr 2002 Qtr 2002 33rdrd Qtr 2003 Qtr 2003 ChangesChanges

Group Turnover (HK$ Group Turnover (HK$

Million)Million)366.8366.8 404.9404.9 + 10%+ 10%

Group Net Profit (HK$ Group Net Profit (HK$

Million)Million)17.1 *17.1 * 18.218.2 + 6%+ 6%

Net Profit as % of SalesNet Profit as % of Sales 4.7% *4.7% * 4.5%4.5% - 0.2%- 0.2%

Basic Earnings Per ShareBasic Earnings Per Share 2.6 Cents *2.6 Cents * 2.7 Cents2.7 Cents + 0.1 Cent+ 0.1 Cent




Hong KongHong Kong

Deflation and relatively high Deflation and relatively high

unemployment to continueunemployment to continue

Threat of SARS re-occurringThreat of SARS re-occurring

Consumer sentiment improving Consumer sentiment improving

but consumers still cautious on but consumers still cautious on

spendingspending

Chinese tourist sector to growChinese tourist sector to grow

Top line sales and net margin to Top line sales and net margin to

improveimprove


ChinaChina

Growth in retail continues due to Growth in retail continues due to

economic growth and increase in economic growth and increase in

disposable incomedisposable income

Consumer habit of using CVS more Consumer habit of using CVS more

important than competition factorimportant than competition factor

Escalating social insurance costEscalating social insurance cost

Expediting new store openingExpediting new store opening

Financial result close to expectationFinancial result close to expectation

2003 Update & Outlook 2003 Update & Outlook Our China StrategiesOur China Strategies

Benefits of CEPABenefits of CEPA

1.1. Lower qualifying requirementsLower qualifying requirements

2.2. Wholly-owned enterpriseWholly-owned enterprise

3.3. Access to over 230 Prefectural & Access to over 230 Prefectural &

County CitiesCounty Cities

4.4. Easier for acquisitionEasier for acquisition

2003 Update & Outlook2003 Update & OutlookProjected Number of Circle K StoresProjected Number of Circle K Stores

2002 2002

ActualActual2003 2003

ForecastForecast2004 2004

ForecastForecast

Hong KongHong Kong 166166 191191 220220

Southern ChinaSouthern China 22 1010 4040

Eastern or Northern ChinaEastern or Northern China -- -- 1010

Acquisition / J.V.Acquisition / J.V. -- -- ++

TotalTotal 168168 201201 270+270+


Improving Hong Kong market conditionsImproving Hong Kong market conditions

Healthy growth in profitability and cash Healthy growth in profitability and cash

flow from operations since 2flow from operations since 2ndnd quarter quarter

China strategies on track but need to China strategies on track but need to

speed up expansionspeed up expansion

Better 2003 profitability outlook versus Better 2003 profitability outlook versus

2002’s2002’s

Documents

3 rd Quarter 2003 Results Presentation A member of the Li & Fung (Retailing) Group 4 November 2003