2005 Mar 24
AEON Stores (Hong Kong)

AEON STORES ANNOUNCES 2004 ANNUAL RESULTS　BOTH HONG KONG AND PRC OPERATIONS RECORDED STEADY GROWTH

(HONG KONG, 24 March 2005) - AEON Stores (Hong Kong) Co., Limited ("AEON Stores" or the "Company") (Stock code: 984) and its subsidiaries (the "Group") today announced the audited consolidated results for the 10 months period ended 31 December 2004. The annual results only covers 10 months since the Company changed its financial year end date to 31 December from end of February.

As a result of the change of the financial year end date, the Group's turnover decreased 14% to HK$3,981 million. Against the same 10 months reporting basis, however, the Group actually achieved an 8% increase in turnover. Net profit was recorded at HK$79 million, decreased by 7% compared to last year. Earnings per share were 30.56 HK cents (year ended 29 February 2004: 33.02 HK cents).

The Board of Directors has recommended the payment of a final dividend of 8.5 HK cents (year ended 29 February 2004: 13 HK cents) per share. The total dividend for the period will be 12.5 HK cents (year ended 29 February 2004: 14 HK cents) including an interim dividend of 4.0 HK cents (year ended 29 February 2004: 1 HK cent) paid earlier.

As at 31 December 2004, the Group maintained a solid financial position with no bank borrowings and cash on hand of approximately HK$776 million (29 February 2004: HK$832 million). Thanks to effective cost control measures, staff costs against turnover and rental costs against turnover were similar to last year, at 8.8% and 7.9% respectively.

Mr. Kazumasa Ishii, Managing Director of AEON Stores, said, "Although the Group has changed its financial year end date, the Group has achieved satisfactory results. Apart from benefiting from the recovering Hong Kong economy, the booming property market, the relaxation of travel restrictions on PRC residents as well as our respectable brand name and quality merchandise also contributed to the satisfactory results."

Sales in Hong Kong recorded HK$2,878 million for the 10 months period ended 31 December 2004, an 18% decrease compared to last year. Comparing on the same period basis, turnover in 2004 grew 2%. The slight sales increment was due to the closure of the Tsz Wan Shan Store in January 2004. Achieving sound performance during the period under review, profit from operations in Hong Kong decreased only by 7% to HK$93 million. The satisfactory results were attributed partly to our successful introduction of a "new concept" JUSCO in Tseung Kwan O. Other GMS in Hong Kong also continued to excel adhering to the commitment of providing customers with merchandise and a shopping environment that guaranteed "safety", "confidence" and "trust".

During the period, the Group opened three new JUSCO $10 Plaza in Tseung Kwan O, North Point, and Jordan, bring the total number of independent $10 Plaza to 7 in Hong Kong. These shops are located strategically in high-density residential and commercial areas, providing quality goods at bargain prices.

Operations in the PRC reported sales totaled HK$1,103 million, a drop of 1% from that of last year. On the same period basis, however, sales surged 27%. The full period operation of the Zhongshan Store, together with the newly opened Foshan Store and Shenzhen East Lake Store attributed to the sales improvement of the operation in the PRC. Profit from operations significantly increased 23% to HK$13 million due to the improved performance of existing stores. Moreover, the "JUSCO" brand is now well recognised in the PRC attracting frequent shoppers. At prime locations, these stores carry excellent selections of daily necessities at good prices.

During the period, the Group established a wholly owned subsidiary, AEON (China) Co., Limited ("AEON China"), which was granted a license to open new GMS in the PRC. The new company is responsible for the Group's expansion in the Pearl River Delta Region. It will also strengthen the Group's backbone in managing merchandise sourcing and logistics system development in the South China region. In addition, AEON China is working with the Group's sister company AIC Inc. and its subsidiaries to optimise resources allocation and create synergies among member companies.

Looking ahead, the Group remains optimistic about Hong Kong's retail market. It will continue to look for appropriate locations for new GMS and JUSCO $10 Plaza. It also plans to partly close the Tai Po Store for renovation in 2005, which will allow it to better meet the anticipated growth in demand among customers in that neighbourhood.

To diversify the source of revenue and bring more value to shareholders, the Group has developed a new business mode - the opening of independent Supermarket, the first of which at apm in Kwun Tong. With an investment of approximately HK$20 million, the new store will carry cutting-edge merchandise that match customers who lead a modern life style and also cater to those who are not reached by GMS.

Although competition in the PRC retail sector is expected to remain intense, the Group believes there is abundant room for expansion in the market. A third GMS in Shenzhen is due to open in early July. By the end of 2006, the Group will open another store in Shunde. While continuing to promote the concept of GMS in the China market, the Group will also venture into other business operations to further enhance its JUSCO brand.

Mr. Ishii concluded, "In the future, our focus will remain in Southern China where we see opportunities for expanding our market share. We believe we have obvious advantage over our competitors as we can provide customers with a great diversity of products and quality customer services. We have rolled out the "AEON Code of Conduct" to ensure excellent services and immediate response to our customers' needs. Our target is to keep providing the best of our best to our customers, fulfilling our motto 'Everything we do, we do for our customers.'"

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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