Convenience Retail Asia Limited 2017 Annual Results Announcement 7 March 2018
Agenda Hong Kong Retail Market Key Highlight 2017 Financial Results Highlight 2018 Outlook Question & Answer 2
HONG KONG RETAIL MARKET KEY HIGHLIGHT 3
Hong Kong Retail Market 10 Total Retail Sales Value & Volume 9 Supermarkets Sales Value & Volume Year-on-year % change 5 0-5 -10-0.2-0.2-1.5-3.7-8.1-7.1 2.2 1.9 Year-on-year % change 6 3 0-3 4.6 1.0 1.3 0.8-0.7-0.8-0.2-2.0-15 2014 2015 2016 2017-6 2014 2015 2016 2017 Value Voulme Value Volume Source: Census & Statistics Department HKSAR 4
Hong Kong Retail Market South China Morning Post 2/3/2018 HK Economic Times 20/2/2018 Sing Pao Daily News 27/12/2017 Sing Pao Daily News 31/12/2017 HK Economic Times 2/2/2018 5
The 3 Plus Strategies ASN Internet + Customer Fun & Novelty 1. Focus on Internet Plus customers 2. Deliver 4P s Plus relevant customer experience 3. Transition to B&M Plus (O2O) business models Copyright Circle K Convenience Stores (HK) Limited 6
3 Plus Strategies Driving Growth 7
OK Stamp It Customer Engagement Tools 1. For Value 2. For Fun 3. Social Sharing 4. e-gift Coupon 5. Customer Experience 6. O2O Lucky Draw Copyright Circle K Convenience Stores (HK) Limited 8
O2O Shake Shake Lucky Star Copyright Circle K Convenience Stores (HK) Limited 9
OK Stamp It KPIs 1,000,000 Monchhichi Promotion Member Recruitment Pokémon Promotion Member Recruitment Member Recruitment Gudetama Promotion >1 Million 800,000 600,000 400,000 200,000 0 23/06/2016 06/07/2016 19/07/2016 01/08/2016 14/08/2016 27/08/2016 09/09/2016 22/09/2016 05/10/2016 18/10/2016 31/10/2016 13/11/2016 26/11/2016 09/12/2016 22/12/2016 04/01/2017 17/01/2017 30/01/2017 12/02/2017 25/02/2017 10/03/2017 23/03/2017 05/04/2017 18/04/2017 01/05/2017 14/05/2017 27/05/2017 09/06/2017 22/06/2017 05/07/2017 18/07/2017 31/07/2017 13/08/2017 26/08/2017 08/09/2017 21/09/2017 04/10/2017 17/10/2017 30/10/2017 12/11/2017 25/11/2017 08/12/2017 21/12/2017 03/01/2018 16/01/2018 29/01/2018 11/02/2018 Copyright Circle K Convenience Stores (HK) Limited 11
OK Stamp It Won Multiple Awards Octopus Partner Awards 2016 - The Octopus Innovation Award Best (Top 1) 2017Q1 Ads Leaderboard Circle K Pokémon Video for OK 齊齊印 app Best of 2016 Ads Leaderboard DoReMi Monchhichi Golden Globe Tigers 2017 Awards Marketing Magazine - Mob-Ex Awards 2017 Best App Consumer Brand & Most Responsive Mobile Campaign - Marketing s inaugural ecommas Awards 2017 Best of Show - Brand Gold for Best Customer Retention Programme Gold for Best Omni-Channel Process Gold for Best E-Commerce Campaign Bronze for Best User Experience - For Excellence In Retail & Store Management - For Excellence & Leadership In Social Media & Digital Marketing - For Excellence & Leadership in Branding & Marketing 12
Re-inventing Strategy Lifting Customer Experience >340,000 Members 13
Circle K Hong Kong Won 2017 Service and Courtesy Award By HKRMA 14
Fast Fashion Eyewear Chain from Japan Business Introduction Japan Quality Always Fresh / Fast Service Value for Money
Japan Quality Amazing Zoff SMART Parts used in Hakuto s lunar rover are made from Ultem, the same materials used in Zoff SMART. 16
Always Fresh New glasses, new mood, Enjoy Your Glasses 17
Fast Services (30 mins) 18
Value For Money 19
The First Store In Hong Kong City Plaza, Taikoo (opened 25 th November 2017) 20
The First Store In Hong Kong City Plaza, Taikoo (opened 25 th November 2017) 21
The Second Store In Hong Kong Telford Plaza, Kowloon Bay (opened 23 rd February 2018) 22
The Second Store In Hong Kong Telford Plaza, Kowloon Bay (opened 23 rd February 2018) 23
2017 FINANCIAL RESULTS HIGHLIGHT 24
Number of Stores End of 2016 Opened Closed End of 2017 Circle K Hong Kong 331 10 (9) 332 Circle K Guangzhou (franchised) 71 4 (11) 64 Circle K Macau (franchised) 30 2 (3) 29 Circle K Zhuhai (franchised) 16 4 (4) 16 Saint Honore HK & Macau 98 13 (9) 102 Saint Honore Southern China 41 8 (8) 41 Zoff Hong Kong - 1-1 CRA Group Total 587 42 (44) 585 25
Group Turnover 2 nd Half Full Year 4,000 +5.3% 7,000 +4.6% HK$ Million 3,000 2,000 1,000 2,532* 2,667* 576 601 1,991 2,106 HK$ Million 6,000 5,000 4,000 3,000 2,000 1,000 4,871* 5,094* 1,072 1,092 3,871 4,077 0 2016 2017 0 2016 2017 Circle K Saint Honore Circle K Saint Honore Less inter-group sales: HK$35M in 2H2016 & HK$40M in 2H2017 Less inter-group sales: HK$72M in 2016 & HK$75M in 2017 26
Gross Profit & Other Income 40 2nd Half 40 Full Year % of Turnover 38 36 34 37.2 37.5 % of Turnover 38 36 34 36.6 36.9 32 32 30 2016 2017 30 2016 2017 27
Group Store Operating Expenses % of Turnover 30 28 26 24 2 nd Half +0.3% 26.1 26.4 % of Turnover 30 28 26 24 Full Year +0.1% 26.2 26.3 22 22 20 2016 2017 20 2016 2017 28
Group Net Profit 2 nd Half Full Year 150 +6.1% 200 +7.7% HK$ Million 100 88 93 HK$ Million 150 100 140 150 50 50 0 2016 2017 0 2016 2017 29
Net Profit by Market (HK$ Million) Full Year 2016 2017 Change Hong Kong & Macau Markets 162 169 +4.2% Southern China Market (2) (5) -1.x% e-commerce Group (20) (14) +34.3% CRA Group Net Profit 140 150 +7.7% 30
Group Net Profit as % of Turnover % of Turnover 6 5 4 3 2 1 0 2 nd Half Full Year 5 0% +0.1% 4 3.5 3.5 2.9 3 3.0 2 1 0 2016 2017 2016 2017 % of Turnover 31
Basic Earnings Per Share 2 nd Half Full Year HK Cents 16 14 12 10 8 6 4 2 0 +5.1% 27 +6.8% 24 21 18 15 12 9 6 3 0 2016 2017 2016 2017 11.63 12.22 HK Cents 19.75 18.50 32
2017 Financial Results Highlight 2 nd Half 2H2016 2H2017 Change Number of Stores 582 585 +3 Group Turnover (HK$M) 2,532 2,667 +5.3% Group Net Profit (HK$M) 88 93 +6.1% Net Profit as % of Turnover 3.5% 3.5% - Basic Earnings Per Share (HK cents) 11.63 12.22 5.1% 33
2017 Financial Results Highlight Full Year 2016FY 2017FY Change Number of Stores 587 585-2 Group Turnover (HK$M) 4,871 5,094 +4.6% Group Net Profit (HK$M) 140 150 +7.7% Net Profit as % of Turnover 2.9% 3.0% +0.1% Basic Earnings Per Share (HK cents) 18.50 19.75 +6.8% Dividends (HK cents) Interim Dividend Final Dividend Special Dividend 3.5 13 27 4 14 - +14.3% +7.7% N/A 34
2018 OUTLOOK 35
2018 Outlook Stagnant demand for Hong Kong consumers Drastic shortage of frontline labour Aggressive landlords O2O retailing is the future The importance of EFS (Easy, Fast & Simple) 36
The Future Is Bright & Clear ASN Internet + Customer Fun & Novelty Quality & Profitable Growth Copyright Circle K Convenience Stores (HK) Limited 37
THANK YOU! 38