2008 Mar 31
AEON Stores (Hong Kong)

AEON STORES ANNOUNCES 2007 ANNUAL RESULTS　 PROFIT SURGES BY 89% TO RECORD HIGH OF HK$280 MILLION

( HONG KONG , 31 March 2008) - AEON Stores (Hong Kong) Co., Limited ("AEON Stores" or the "Company") (Stock code: 984) and its subsidiaries (the "Group") announced its annual results for the year ended 31 December 2007.

The Group's revenue grew by 11% to HK$4,760 million (2006: HK$4,287 million) mainly driven by the rapid revenue growth of the stores in the PRC. Gross margin increased slightly from 34.7% to 34.8%. Profit attributable to shareholders for the year, including a one-off write back of royalty savings of HK$64 million, surged by 89% to the record high of HK$280 million (2006: HK$148 million). Earnings per share also rose by 89% to 107.71 HK cents (2006: 57.06 HK cents).

The Board of Directors proposed the payment of a final dividend of 26.0 HK cents (2006: 17.5 HK cents) per share. Together with an interim dividend of 8.0 HK cents (2006: 5.5 HK cents) per share and the special dividend of 20.0 HK cents (2006: nil) per share paid earlier, the total dividend for the year will be 54.0 HK cents (2006: 23.0 HK cents) per share.

Both staff costs and rental costs to revenue dropped to 10.9% and 10.2% (2006: 11.3% and 10.6%) respectively. As at 31 December 2007, the Group maintained a net cash position with cash and bank balances of HK$1,651 million (2006: HK$1,541 million) and short-term bank loans of HK$100 million (2006: HK$60 million).

Mr. Lam Man Tin, Managing Director of AEON Stores, said, "We are pleased to report that we had a successful year in 2007 . Despite the highly volatile stock markets in Asia in the second half of 2007, the flourishing PRC economy and stable economic growth in Hong Kong continued to benefit our business. The record-breaking results make the most befitting gift to commemorate the Group's 20th anniversary."

Under the recovery of the Hong Kong economy and the sustained consumption desire, the Group achieved satisfactory performance in the territory. Notwithstanding the closure of JUSCO Tseung Kwan O Store in the second half of 2007, the Group's revenue in Hong Kong rose by 7% to HK$3,091 million (2006: HK$2,903 million) while segment result surged by 72% to HK$296 million (2006: HK$172 million). Even less the one-off write-back of the royalty savings, operations in Hong Kong still achieved a 35% growth in segment result to HK$232 million.

To expand its network in Hong Kong, in August 2007, the Group opened its third supermarket in Grand Waterfront Plaza as encouraged by the success of the two JUSCO Supermarket in Kwun Tong and Lam Tin. The Group also opened its 12 th JUSCO $10 Plaza in Sai Wan in December to capture opportunities in this densely populated residential area. To meet the growing demand for healthy and delicious meals among Hong Kong consumers, the Group introduced a new business model - Bento Express - in Hong Kong during the year. The first shop was opened in September in Wanchai and the second one in December in Mongkok, targeting office goers and students in those districts.

Economy of the PRC, particularly the south China region, sustained strong growth momentum during the year. Benefiting from the satisfactory growth in sales of existing and new stores, revenue of the Group's PRC operations climbed by 21% to HK$1,669 million (2006: HK$1,384 million), with segment result jumping up by more than 7 times to HK$39 million from HK$5 million last year. In January 2007, the Group opened its first shopping centre AEON Shunde Shopping Centre in Shunde , Guangdong , marking a milestone in its development. To continue its expansion of network in south China , the Group opened its fourth and fifth General Merchandise Store ("GMS") at Coco Park and Nanshan in Shenzhen in April and December 2007 respectively.

As the Hong Kong economy was reviving and is expected to keep moving steadily on the path of recovery, the Group is cautiously optimistic about its Hong Kong operations in the near future. To meet the ever-changing needs of customers, the Group will partially close JUSCO Kornhill Store for renovation from April 2008 and schedule to reopen it in the second half year. The Group is exploring the opportunities to diversify into in-door amusement centre business. Besides, the Group will also look for suitable locations to open more new stores especially JUSCO $10 Plaza and Bento Express and explore other new opportunities to provide more comprehensive services.

For the PRC operations, the macroeconomic austerity measures have not significantly hindered economic growth in the country and the retail industry continues to flourish. To replicate the success in running the first shopping centre in Shunde, the Group is going to open its second shopping centre in Huizhou , Guangdong in 2008. The Group will also open the 12 th GMS in the PRC in Foshan , Guangdong in the second half of 2008 to further enhance its economies of scale. In January 2008, the Group signed an agreement to acquire the remaining 35% interests in the registered capital of Shenzhen AEON Friendship Co., Ltd. (" AEON Shenzhen"). After the acquisition is completed, the Group will hold 100% stake in AEON Shenzhen, certain operational functions of which can then be integrated with those of the Group to improve cost-effectiveness. The Group will also be able to achieve greater economies of scale and enjoy stronger bargaining power with suppliers.

"With profound experience we have accumulated for the past 20 years in the retail industry and our motto 'everything we do, we do for our customers', we will strive to enrich our business portfolio with new initiatives that can allow us to stand out and thrive in the competitive market, aiming to bring the maximum returns to our shareholders" 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