2 group financial highlights for the year ended december 31 yoy change (%) 20032002 turnover...
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Group Financial HighlightsGroup Financial HighlightsFor the Year Ended December 31
YOY change (%)
2003 2002
Turnover (HK$M) 3,389 3,588 5.5
Gross profit (HK$M) 1,634 1,677 2.6
EBITDA (HK$M) 488 583 16.3
Operating profit (HK$M) 364 385 5.5
Profit attributable to shareholders (HK$M) 266 328 18.9
Earnings per share (HK cents) 18.5 22.8 18.9
Dividend per share - interim (HK cents)
- interim special (HK cents)
- final (HK cents)
- special (HK cents)
1.5
3.0
4.5
12.0
4.5
0.0
4.5
10.0
66.7
N.A.
-
20.0
Dividend payout ratio (%) 113.5 83.3 30.2
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Selected Financial Highlights & RatiosSelected Financial Highlights & Ratios For the Year Ended December 31
2003 2002
Net cash & bank balances (HK$M) 784 614
Cash inflow from operating activities
(HK$M)
498 481
Inventory turnover on sales (days) 24 26
Current ratio (x) 2.5 2.8
Gearing on shareholder’s equity (x) 0.4 0.3
Gross margin (%) 48.2 46.7
Operating margin (%) 10.7 10.7
Net margin (%) 7.8 9.1
Return on average equity (%) 14.8 18.8
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Divisional HighlightsDivisional HighlightsFor the Year Ended December 31
Division Turnover Operating Profit
(In HK$M) 2003 2002 YOY Chg (%) 2003 2002 YOY Chg
(%)
Retail And
Distribution3,221 3,375 4.6 316 320 1.3
Manufacturing 168 213 21.1 42 54 22.2
Others * - - - 6 11 45.5
Total 3,389 3,588 5.5 364 385 5.5
* Includes interest income and intra-division eliminations
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Retail and Distribution DivisionRetail and Distribution DivisionFor the Year Ended December 31, 2003
Retail and Distribution Turnover Composition by Market
Mainland China25%
(25%)
Hong Kong22%
(23%)
Taiwan 19%
(20%)
Singapore11%
(11%)
Malaysia4%
(4%) Others14%
(14%)
Australia5%
(3%)
Note:2002’s figures in brackets
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Retail and Distribution Division Retail and Distribution Division (Cont’d)(Cont’d)
For the Year Ended December 31, 2003
Retail and Distribution Turnover Composition by Brand
Giordano Ladies4%
(4%)
Bluestar Exchange 7%
(7%)
Giordano core line + Junior89%
(89%)
Note:2002’s figures in brackets
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Retail and Distribution Division Retail and Distribution Division (Cont’d)(Cont’d)
Giordano Giordano core core lineline + Junior + Junior
Giordano Giordano LadiesLadies
Bluestar Bluestar ExchangeExchange
Retail Turnover Growth (YOY % Chg)
3.2 10.9 5.4
Gross Margin (Y
OY Basis Point Chg)
180 30 flat
• Total comparable store sales 9.3%
• Total comparable store gross profit 7.7%
Brand StatisticsBrand Statistics
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Market ReviewMarket ReviewMainland China
• Sales down 5%; sales per sq. ft. fell 25%
• Adverse effects of SARS
• Warm weather dampened sales in Sept. & Oct.
• Cold temperatures resulted in sales rebound in Nov. & Dec.
• Rental in prime locations remain high
• Added 39 core line, 3 Junior, 9 Bluestar outlets * Includes directly managed outlets only
Sales
(HK$M)
Sales per
Sq. ft. (HK$)
Comp. Store Sales
Chg.*
Retail Floor
area(ft2)
No. of Outlets
No. of Sales assoc.
2003 815 3,000 13% 484,300 581 703
2002 856 4,000 - 434,800 532 633
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• Sales down 10%; sales per sq. ft. fell 9%• Worst hit by SARS due to reliance on tourism• Tightening inventory; cutting costs; high-margin products• Profitability recovered in 2H• Higher gross margins, except Bluestar; prices reduced for larger market share
Market ReviewMarket ReviewHong Kong
Sales
(HK$M)
Sales per
Sq. ft. (HK$)
Comp. Store Sales
Chg.
Retail Floor
area(ft2)
No. of Outlets
No. of Sales assoc.
2003 697 6,200 15% 112,100 75 486
2002 776 6,800 3% 116,400 73 537
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• Sales down 11%; sales per sq. ft. fell 10%• Momentum picked up in 2H on inventory mgmt and global product platform• Giordano Ladies major recovery after SARS• Bluestar capturing a larger market share in 4Q 03• Non-performing stores closed; better located stores added in late 4Q• Current recovery in performance sustainable
Market ReviewMarket ReviewTaiwan
Sales
(HK$M)
Sales per
Sq. ft. (HK$)
Comp. Store Sales
Chg.
Retail Floor
area(ft2)
No. of Outlets
No. of Sales assoc.
2003 604 2,600 13% 241,500 195 794
2002 677 2,900 15% 232,900 182 773
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•Sales down 7%; sales per sq. ft. fell 14%• Iraq War and SARS led to negative consumer sentiment in 1H•Heavy industry-wide price promotions in 2H•Recent modifications to our competitive strategy should yield stronger
performance in 2004
Market ReviewMarket ReviewSingapore
Sales
(HK$M)
Sales per
Sq. ft. (HK$)
Comp. Store Sales
Chg.
Retail Floor
area(ft2)
No. of Outlets
No. of Sales assoc.
2003 348 7,700 14% 43,600 43 279
2002 372 9,000 7% 46,000 49 320
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Market ReviewMarket Review
(in HK$M) AustraliaAustralia MalaysiaMalaysia IndonesiaIndonesia ThailandThailand JapanJapan TotalTotal
2003 149 114 90 64 28 445
2002 98 114 46 38 25 321
YOY Chg (%) 52 flat 96 68 12 39
• Accounts for 14% of total retail turnover (2002:10%)
• YOY sales and gross margins improved
• In Australia, 4 new stores were added in late 4Q; 5 new outlets planned for 2004;
and growth momentum continuing
• In Japan, shop portfolio revamped; efficiency improved by store size reduction.
Sales per sq. ft. rose 12.5%. 10 new outlets to be added in 2004.
Other MarketsOther Markets
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• Hurt by competition and weak consumer
spending, sales fell 25% YOY• Frequent markdowns led to gross margins
decline• Occupancy costs at department stores up due to
higher commission rates• Higher occupancy costs, coupled with falling
sales productivity resulted in double-digit YOY
profits decline
Market ReviewMarket ReviewKorea
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By the By the eend of December 31, 200nd of December 31, 20033, , ttotal of 1otal of 1363363 ooutlets utlets wworldwideorldwide
Mainland ChinaMainland China581581
Hong Kong75
JapanJapan1313
AustraliaAustralia3434
TaiwanTaiwan195195
ThailandThailand3333
MyanmarMyanmar1717
PhilippinesPhilippines4242
SingaporeSingapore4433
MalaysiaMalaysia4242
IndonesiaIndonesia3333
KoreaKorea117272
Middle EastMiddle East7575
ArubaAruba55
BruneiBrunei33
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Number of Outlets, by Region and by BrandNumber of Outlets, by Region and by Brand (as at December 31, 2003) (as at December 31, 2003)
Total Giordano core line
Giordano Ladies
Giordano Junior*
Bluestar Exchange
Aruba 5 5 0 0 0
Australia 34 34 0 0 0
Brunei 3 3 0 0 0
Hong Kong 75 44 8 0 23
Indonesia 33 33 0 0 0
Japan 13 13 0 0 0
Korea 172 126 0 46 0
Mainland China 581 555 5 3 18
Malaysia 42 42 0 0 0
Middle East 75 75 0 0 0
Myanmar 17 17 0 0 0
Philippines 42 42 0 0 0
Singapore 43 36 0 7 0
Taiwan 195 135 8 7 45
Thailand 33 33 0 0 0
Total 1,363 1,193 21 63 86
*Includes stand-alone outlets only
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Manufacturing DivisionManufacturing Division(5.0 % of consolidated turnover)
• Supplied 28.0% of retail division’s requirement• Turnover before elimination fell 9.7%• Sales contracted during the SARS outbreak; especially sa
les to third-party Japanese customers • Gross margins fell by 90 bps.• Industry surplus capacity led to price competition resulti
ng in lower margins• Operating profit fell 22%• New European client base
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• Positive medium term global economic outlook• 2004 to be a year of rejuvenation & growth• Aim for higher sales & profit growth
Mainland China • Medium term earnings driver • Besides flagship store in Shanghai, nation-wide store refurbi
shments
Hong Kong• Upbeat on reviving economy; concerned about speculative f
orces may inflate property costs• Focus on enhancing brand image
OutlookOutlook
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OutlookOutlook
Taiwan • Falling sales trend stopped• Presidential election casts uncertainty• To add 30 core line and 12 Bluestar outlets in 2004
Singapore• Wide-spread wage cuts and Goods & Services Tax Hike• Focus on service & brand differentiation; and market segme
ntation
19
OutlookOutlook
Korea • Mixed economic outlook for 2004; worst is over• Global Information platform enhances sales and inventory; cl
oser ties with other markets• Markdowns curtailed by better product cycle management• Plan to open about 20 outlets
Japan• On the right track• Operating model working and operating losses within budget• Focus on Kansai area• Projected breakeven during 2H
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