2010 Aug 26
AEON Stores (Hong Kong)

AEON STORES ANNOUNCES 2010 INTERIM RESULTS　PROFIT ATTRIBUTABLE TO SHAREHOLDERS SURGED 106% TO HK$114.8 MILLION

(HONG KONG, 25 August 2010) – AEON Stores (Hong Kong) Co., Limited ("AEON Stores" or the "Group") (Stock code: 984) today announced its interim results for the six months ended 30 June 2010.

The Group’s revenue up 9% to HK$3,062.7 million (2009: HK$2,815.7 million) was mainly attributable to improved performance of both newly opened stores and existing stores as the economy revived spurring better consumer sentiment in both Hong Kong and the PRC. The gross profit margin slightly lowered to 31.5%. Profit attributable to shareholders achieved a substantial increase of 106% to HK$114.8 million as compared to HK$55.7 million in the last corresponding period. Besides a strong performance, the significant growth was due to the dragging down of the last corresponding period’s performance by the one-off impairment loss arising from certain refundable prepaid rentals not being accepted in arbitration.

Basic earnings per share were 44.17 HK cents (2009: 21.42 HK cents). The Board of Directors resolved to declare the payment of an interim dividend of 22.1 HK cents (2009: 9.6 HK cents) per share for the six months ended 30 June 2010.

During the review period, the ratio of staff cost to revenue improved from 10.4% to 9.8% as a result of effective cost-trimming measures, while rental cost to revenue also declined from 11.3% to 10.4%. The Group maintained a stable net cash position with cash and bank balance of HK$1,816 million as at 30 June 2010 (31 December 2009: HK$1,904 million) and bank borrowings of HK$103 million (31 December 2009: HK$170 million).

Mr. Lam Man Tin, Managing Director of AEON Stores, said, "We are delighted about the satisfying growth that we are able to achieve in the first half of 2010. During the period, the global economy has been recovering from the downturn brought on by the financial tsunami, the gradually improving income and employment conditions have been providing continual support to retail business. With the extensive retail network and strong brand recognition in the local community established, we are at full gear to capture the emerging business opportunities in the reviving economy."

Boosted by the improved consumer sentiment, the Group’s Hong Kong operations recorded HK$1,682.7 million in revenue, a 6% growth against HK$1,585.9 million in the last corresponding period. Segment profit also rose moderately by 3% from HK$94.9 million to HK$98.2 million, mainly attributable to the improved economic conditions.

In the past six months, the Group closed the store in Lok Fu in February and relocated it to MegaBox, Kowloon Bay. Opened in June, the new Kowloon Bay Store is the Group’s largest store in Kowloon East, which continues to serve the tremendous demand in the district. Besides, the Group opened two more JUSCO $10 Plaza in Tsim Sha Tsui and Ngau Tau Kok which delivered satisfactory performances.

Separately, economy in south China also recorded a significant growth in the first half of 2010 after the rebound in late 2009. Attributable to the improved performance of existing stores and a new store opened in Guangzhou Jiayu Sun City Plaza, as well as a full six months contribution from the stores in Foshan, Shenzhen and Guangzhou, the Group recorded a 12% increase in revenue from the PRC market to HK$1,380.0 million in the reviewing period (2009: HK$1,229.9 million). The strong growth is even better than indicated, given that one store in China Plaza in Guangzhou was closed during the review period.

Benefiting from the strong growth in domestic demand and consumption, and improved performance of the newly opened stores, the PRC operations achieved segmental profit for the period of HK$66.4 million (2009: loss of HK$3.2 million). Excluding the effect from changing the expected useful lives of building fixtures which had saved HK$14.2 million from depreciation during the period, the segment still recorded a profit of HK$52.2 million for the reviewing period.

Looking forward, Mr. Lam commented, "We expect the current positive consumer sentiment is likely to be maintained, however, due to the recently increased level of uncertainty in the global economic environment and consolidation in the asset markets, we believe the performance of retail sales in the second half of the year may not be as robust as in the first half. Nevertheless, we remain cautiously optimistic about the prospects of its operations in Hong Kong."

The Group’s largest store in Kowloon East at MegaBox, Kowloon Bay was opened in early June, and is decorated in a young, energetic and fresh manner to convey a modern Japanese lifestyle. It also carries a great variety of products that best serve the needs of the different family types in the district. The Group has recorded an excellent performance from the new store, as supported by the huge population in the area as well as growing working population and visitors.

The Group is optimistic about the outlook of the retail market in south China through the support of the Chinese Government’s economic stimulus plan and continued strong economic growth. The Group plans expansion in 2010 at its fastest pace in order to strengthen its foothold and tap the tremendous business potential. The Group has introduced new independent supermarket in Shenzhen, the PRC in August with a modern style and decor. Subsequently, there will be two-to-three more during the second half of 2010 in Guangzhou and the Group also plans to open a General Merchandise Store in Dongguan in second half of 2010.

"To further leverage the emerging business opportunities in the improving economy, and expand the reach of its retail network, we will continue to look for suitable locations to open more stores, and also explore new business models so as to speed up business expansion and address the changing needs of 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 retail businesses (General Merchandise Stores and Independent Supermarkets). Currently, it operates 10 GMS, 2 independent supermarkets, 31 independent Living PLAZA by AEON, 31 independent Daiso Japan, 4 Mono Mono, 4 KOMEDA'S Coffee and 1 JELYCO DO By KOMEDA'S Coffee in densely populated districts in Hong Kong. It also operates 21 GMS and 17 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