2009 Mar 16
AEON Stores (Hong Kong)

AEON STORES ANNOUNCES 2008 ANNUAL RESULTS 　 REVENUE INCREASES BY 13% TO HK$5,376.6 MILLION PRC SEGMENTAL PROFIT SURGES BY 1.5 TIMES

(HONG KONG, 16 March 2009) – AEON Stores (Hong Kong) Co., Limited ("AEON Stores" or the "Group") (Stock code: 984) announced its annual results for the year ended 31 December 2008, reporting a 13% increase in revenue to HK$5,376.6 million (2007: HK$4,759.9 million) attributable mainly to the fast growth of its stores in the PRC.

Gross profit margin increased slightly from 34.8% to 34.9%. Profit attributable to shareholders for the year was HK$273.0 million (2007: HK$280.1 million). If a one-off write back of royalty savings of HK$64 million in 2007 were excluded, the Group would have recorded a significant 26% surge in attributable profit this year. Earnings per share were 104.98 HK cents (2007: 107.71 HK cents).

The Board of Directors recommended payment of a final dividend of 27.9 HK cents (2007: 26.0 HK cents) per share. Together with the interim dividend of 19.3 HK cents (2007: 8.0 HK cents) already paid, the total dividend for the year will amount to 47.2 HK cents (2007: 54.0 HK cents, including a special dividend of 20.0 HK cents) per share.

During the year under review, staff costs to revenue remained unchanged at 10.9% whereas rental costs to revenue reduced marginally from 10.2% to 9.7%. As at 31 December 2008, the Group maintained a stable net cash position with cash and bank balance of HK$1,619 million (2007: HK$1,651 million) and short-term bank borrowings of HK$152 million (2007: HK$100 million).

Mr. Lam Man Tin, Managing Director of AEON Stores, said, "We are pleased to have achieved satisfactory results in the challenging year of 2008. Although the economy and retail market of the PRC and Hong Kong contracted notably because of the global financial crisis, the Group was able to deliver satisfactory performance reflecting its shrewd business strategies and operational acumen, as well as the support it has from its strong pool of talents in the retail industry."

Despite the economic slowdown towards the end of the year in Hong Kong dampening consumer sentiment, the Group was still able to record an increase in segmental revenue of 1% to HK$3,108.7 million (2007: HK$3,090.7 million) for the year. Such growth is significant taking into consideration that the Kornhill General Merchandise Store ("GMS") was partially closed for three months for renovation and the Tseung Kwan O GMS was closed since June 2007. The segmental profit was HK$249.2 million (2007: HK$295.9 million). Excluding the write-back of royalty savings of HK$64 million in last year, the segmental profit would have risen 7% this year braced by boosted operational efficiency and acumen of the Group in catering for local customer needs.

To enhance its business portfolio, the Group introduced the MooRry Fantasy (an indoor amusement centre) and JUSCO Living Plaza, a new business model applicable in stores of smaller scale than a GMS to meet the specific needs of customers in different districts. During the year under review, the Group expanded its operations in Hong Kong adding three JUSCO $10 Plaza, one Bento Express (Japanese take-away shop) and one JUSCO Living Plaza in the market.

South China enjoyed strong economic growth and prosperous retail market during the year. The strong sales performance of the stores, and the new shopping centre that opened in December in Huizhou, together contributed to the robust performance of the Group's PRC operations. The Group recorded segmental revenue of HK$2,267.9 million, representing a year-on-year rise of 36% (2007: HK$1,669.2 million). The PRC segmental result for the year surged 154% to HK$97.9 million (2007: HK$38.5 million). Apart from making more sales, the Group credited the good performance of the segment to better economies of scale. Besides, since it gained 100% control on Shenzhen AEON Co., Ltd., the Group has also effectively extended its geographical footprint in the market.

Although the local economy is expected to slow down still more in the first half of 2009, the Group is hopeful that the market will stabilise in the second half year. With rental expected to come down in the current economic climate, the Group will continue to explore expansion potential but with prudence heeding the overall economic environment. It has plans to open one JUSCO Living Plaza in Lai Chi Kok in the first quarter of 2009, and two independent supermarkets in Sha Tin and Tseung Kwan O in the second half of 2009 and early 2010 respectively. The Group will look for suitable locations for new retail outlets in the coming year.

With the Chinese Government continuing to introduce economic policies to stimulate domestic consumption, the PRC is likely to be among the first country to recover from the global economic downturn. The Group will open two GMS in Foshan and Shenzhen in the first half and by the end of 2009 respectively. The expanded network will enable the Group to achieve better yet economies of scale and boost its brand name in south China.

"Despite the poor economic conditions in Hong Kong and the PRC, the Group was able to achieve growth. This accomplishment speaks to our ability to address the different and changing needs of customers in the two markets, a strength we will continue to apply in driving our retail operations forward," 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