2007 Sep 17
AEON Stores (Hong Kong)

AEON STORES ANNOUNCES 2007 INTERIM RESULTS　PROFIT SURGED BY ALMOST 3.6 TIMES TO HK$128 MILLION

(HONG KONG, 17 September 2007) - AEON Stores (Hong Kong) Co., Limited ("AEON Stores" or the "Company") (Stock code: 984) and its subsidiaries (the "Group") today announced its interim results for the six months ended 30 June 2007.

The Group's revenue was up 15% to HK$2,359 million against HK$2,052 million for the last corresponding period, reflecting the rise in sales of its existing and newly opened stores. Gross profit margin increased slightly from 33.0% in the last corresponding period to 33.6%, mainly because the Group embarked on stock clearance last year. Profit attributable to shareholders surged by almost 3.6 times from HK$28 million to HK$128 million, reflecting mainly the significant growth in revenue and improvement in gross profit margin.

Basic earnings per share were 49.39 HK cents (2006: 10.78 HK cents). The Board of Directors resolved to declare the payment of an interim dividend of 8.0 HK cents (2006: 5.5 HK cents) and a special dividend of 20.0 HK cents (2006: Nil) per share.

During the review period, staff cost and rental cost relative to revenue was down from 11.5% to 10.9% and from 10.9% to 10.0% respectively. The Group maintained a stable net cash position with cash and bank balance of HK$1,670 million as at 30 June 2007 (31 December 2006: HK$1,541 million) and short-term bank borrowings of HK$92 million (31 December 2006: HK$60 million).

Mr. Lam Man Tin, Managing Director of AEON Stores, said, "I am very pleased to report that we managed to maintain growth momentum in the last financial year and also delivered encouraging results in first half of 2007. The achievement adds to the joy of the Group celebrating its 20th anniversary this year. With a well-established distribution network and various stores appealing to mass consumers and specific consumer groups in the market, we are well-positioned to grow leveraging the prosperous economic environment in Hong Kong and the PRC."

In the first half of 2007, declining unemployment rate and an overall reviving economy stimulated consumption sentiment in Hong Kong. Against this backdrop, the Group's Hong Kong operations delivered encouraging results with revenue up by 12% from HK$1,405 million to HK$1,575 million. Segment profit for the period rose 2.5 times from HK$45 million to HK$156 million, with costs incurred by the closure of JUSCO Tseung Kwan O Store taken into account. Excluding the one-off write-back for the royalty savings, the profit would still have doubled to HK$92 million resulting from strong operating performance.

The rapid growth of economies in southern China continued to present business opportunities to the Group's mainland operations. Benefited from the satisfactory performance of the existing stores and new stores, the PRC operations reported a 21% growth in revenue to HK$784 million from HK$647 million. Segment profit for the period increased six folds to HK$12 million from HK$2 million in the last corresponding period. In January 2007, the Group opened its first shopping centre, AEON Shunde Shopping Centre ("Shopping Centre") in Shunde, Guangdong. The over 47,000 sq. m. Shopping Centre includes a 18,500 sq. m. General Merchandise Store ("GMS") and over 90 retail outlets. To capture vast market opportunities in the region, the Group also opened another GMS in April 2007 in the Coco Park, Shenzhen.

Looking forward, the Hong Kong economy has continued to revive benefiting the retail market. However, the Group holds a cautiously optimistic view about the operational environment in Hong Kong heeding possible adverse impact of rising inflation rate and rental cost. Seeing the good market response to the two JUSCO Supermarket in Kwun Tong and Lam Tin, the Group opened a third independent supermarket in August 2007. The about 31,000 sq. ft. new supermarket in Grand Waterfront Plaza is the largest in To Kwa Wan. It provides over 8,000 food and grocery items, over 40% of which are directly imported from Japan. As more people are moving into this new estate and new private housing estates are expected to be completed in the next few years, the Group sees abundant opportunities for the new store in coming years.

Mr. Lam added, "To meet the ever-changing needs of customers, we are going to introduce a new business model, named Bento Express, to Hong Kong and targets to open our first store in Wan Chai by the end of September 2007. This new store will mainly provide ‘low fat, low salt, low sugar and high fibre' healthy Japanese food and beverages take-away service as well as TOPVALU merchandises. With Japanese food gaining popularity and healthy lifestyle becoming prevalent in Hong Kong, we are confident that this new model will be well-received in the market."

In southern China, the economy continues to flourish and drives the growth of the retail industry. The Group believes that both their new and existing stores will benefit from customers' robust demand for quality merchandise and services. To grasp the emerging opportunities, the Group is going to open one more GMS in Nanshan, Shenzhen by end of 2007. The investment cost is expected to be around RMB36 million. The Group will strive to identify more suitable locations for new stores to accelerate its expansion plan in the PRC.

"Twenty years ago, AEON Stores had but a single GMS in Hong Kong. We have today over 30 outlets in various business models in Hong Kong and southern China. It is our ‘everything we do, we do for our customers' commitment that has supported growth of the Group over the years. In the coming days, we will continue to look for suitable locations to open more new stores, especially for JUSCO $10 Plaza and JUSCO Supermarket, to bring our excellent products and services to more customers," concluded Mr. Lam.

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About AEON Stores
AEON Stores was established in Hong Kong in 1985 and listed on the Hong Kong Stock Exchange in 1994. The Group is mainly engaged in the operation of general merchandise stores (GMS). Currently, it operates 10 GMS, 2 independent supermarkets, 33 independent Living PLAZA by AEON, 30 independent Daiso Japan, 1 independent Bento Express by AEON and 4 Mono Mono and 3 KOMEDA'S Coffee in densely populated districts in Hong Kong. It also operates 21 GMS and 15 independent supermarkets in Guangdong Province, the PRC.

For more information：
AEON Stores (Hong Kong) Co., Limited
Corporate Communication Department
Tel.：（852）2165 0777
Email：aeonpr@aeonstores.com.hk