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
15
Total: $173 Billion
- 2.3%
9.9
10
4.0
5
1.2
5.2
6.7
0.1
0
-2.5
-5
-6.1
-10
-15
-20
-6.5
-11.1
-12.6
-15.2
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source: HKSAR, Census and Statistics Department
2003 Annual Results Presentation
Agenda
 2003 Financial Results Highlights
 2004 Outlook & Update
 Questions & Answers
2003 Financial Results Highlights
Group Turnover
+ 9.5%
2,000
HK$ Million
1,600
1,305.1
1,393.5
1,526.1
1,140.7
1,200
800
400
0
No. of stores - HK
No. of stores - China
HK Retail Sales
2000
2001
2002
2003
123
146
166
186
-
-
2
7
+ 3.8%
- 1.2%
- 4.1%
- 2.3%
2003 Financial Results Highlights
Group Net Profit
+ 0.5%
80
54.7 *
HK$ Million
60
60.4 *
60.7
40.0*
40
20
0
2000
2001
2002
2003
* Restated for income tax effect per SSAP No.12 (revised) and long service payment costs per SSAP No.34 (revised)
Net Profit By Market
2002
2003
Change
Hong Kong Market (HK$ Million)
61.6
69.2
7.6
China Market (HK$ Million)
(1.2)
(8.5)
(7.3)
Total (HK$ Million)
60.4
60.7
0.3
2003 Financial Results Highlights
Net Profit as % of Sales
- 0.3%
5.0
% of Sales
4.5
4.2 *
4.3 *
4.0
4.0
3.5*
3.5
3.0
2000
2001
2002
2003
* 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
15
10
% Change
10
10
9
8
Total 2003
+ 9.5%
5
0
-5
-1.1
-0.6
-0.9
-1.6
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
Total Stores
Comparable Stores
Total 2003
- 1.1%
Slight Decline in Gross Margin /
Other Income
- 0.2%
34
32.8
% of Sales
33
32.6
31.6
32
31.0
31
30
29
2000
2001
2002
2003
Tight Control of Store Operating
Expenses
30
% of Sales
25
20
22.0
22.2
22.7
23.3
6.4
6.7
6.9
7.2
6.9
6.9
6.9
7.0
8.7
8.6
8.9
9.1
2000
2001
2002
2003
15
10
5
0
Labour Cost
Rental Cost
Other Expenses
2003 Financial Results Highlights
Basic Earnings Per Share
10
9.1 *
HK Cents
9
8.1*
9.1
8.4*
8
7
6
2000
2001
2002
2003
* Restated for income tax effect per SSAP No.12 (revised) and long service payment costs per SSAP No.34 (revised)
2003 Financial Results Highlights
2002
2003
Change
168
193
+ 25
Group Turnover (HK$ Million)
1,393.5
1,526.1
+ 9.5%
Group Net Profit (HK$ Million)
60.4 *
60.7
+ 0.5%
4.3% *
4.0%
- 0.3%
9.1 Cents *
9.1 Cents
-
-
4 Cents
+ 4 Cents
Number of Stores
Net Profit as % of Turnover
Basic Earnings Per Share
Total Dividend Per Share
 Paid Mid Year
 To Be Paid
1 Cent
3 Cents
* 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
2002
2003
Change
Group Turnover (HK$ Million)
360.8
394.0
+ 9.2%
Group Net Profit (HK$ Million)
17.1*
18.6
+9.1%
4.7%*
4.7%
-
2.6 Cents*
2.8 Cents
+ 0.2 Cent
Net Profit as % of Turnover
Basic Earnings Per Share
* 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
28 *
30
% Change
20
10
9*
4*
2*
7
9
Q3
2003
Q4
2003
2
0
-10
-20
-30
-27
Q1
2002
Q2
2002
Q3
2002
Q4
2002
Q1
2003
Q2
2003
* Restated for income tax effect per SSAP No.12 (revised) and long service payment costs per SSAP No.34 (revised)
2003 Achievements – Hong Kong
1. 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
2003 Achievements – Hong Kong
3. Great Category Management Initiatives
Weekend Specials
Microwave Lunch Boxes
Premiums Redemption
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 Achievements
Refining 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 & Outlook
2004 Update & Outlook
Circle 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 & Outlook
Circle 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 & Outlook
To Summarize
 Quality growth in Hong Kong
 Aggressive growth in China
 Building customer preference
is the key
 Good balance between top
line and profitability