''Strengthening Regional Advantages to Solidify Market Leadership'', Lianhua Supermarket Announces 2005 Annual Results.HONG KONG Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. -- Lianhua Supermarket Holdings Co., Ltd.: Finance and Business Highlights --Turnover, operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. and net profit attributable to shareholders recorded RMB RMB Right Mouse Button RMB Regional Management Board (USACE) RMB Rolf Maier Bode (musician, band) RMB Ren Min Bi (currency of People's Republic of China) 14,313 million, RMB266 million and RMB240 million respectively, increased 31.85%, 4.30% and 11.20% respectively when comparing with 2004 --Earnings per share was RMB 0.39 --The Board recommended a final dividend of RMB0.07 per share --Net increase of number of outlets by 486 and reached 3,609 Lianhua Supermarket Holdings Co., Ltd. ("Lianhua Supermarket" or the "Company", together with its subsidiaries, collectively the "Group"; HKEx stock code: 980) today announced its annual results for the 12 months ended 31 December 2005 (the "Review Period" or the "Period"). During the Review Period, business development of Lianhua Supermarket maintained its growth momentum and achieved satisfactory results. Turnover for the Group reached RMB14,312 mbillion, a 31.85% increase over a turnover of RMB10,855 million in 2004. Operating profit and net profit attributable to shareholders were 266 million and 240 million respectively, 4.30% and 11.20% higher than that of 2004. Earnings per share was RMB0.39. The Board recommended a final dividend of RMB0.07 per share for the year ended 31 December 2005, together with an interim dividend of RMB0.06, total dividend per share for the year was RMB0.13. The year 2005 is the first year that China fully opened its retail market to the foreign investors. During the year, Lianhua Supermarket continued to excel and deliver satisfactory results despite the competitive operating environment In computing, an operating environment is the environment in which users run programs, whether in a command line interface, such as in MS-DOS or the Unix shell, or in a graphical user interface, such as in the Macintosh operating system. . Commenting on the results, Mr. Wang Zongnan, Chairman of Lianhua Market, said, "China's economy continued to show strong growth during the year, the operating environment for retail industry is relatively favorable. As a retail chain operator with an extensive retail outlets retail outlet n → punto de venta retail outlet n → point m de vente retail outlet retail n → nationwide and comprehensive mode of retail, Lianhua continued to maintain its steady growth in 2005. During the Review Period, Lianhua Supermarket focused on the development of its 3 major formats of operation and made significant progress and improvements in network development, business operation and system enhancement." Expanding Network In 2005, Lianhua Supermarket continued to expand its network to further enhance its dominance in the regions the Group had entered. For the review period, the number of outlets increased 486 to a total of 3,609, compared with 3,123 in 2004. During the Review Period, the Group continue to increase its outlets through the opening of new outlets, acquired 39 hypermarkets and 83 supermarkets by interest increasing, shares buying, asset purchase and other forms of merger and acquisition, accounting for 25% net addition of outlets. The Group's franchising strategy was also proved successful during the Period, with 65% of the new outlets were added in the form of franchising, in which 144 of them was supermarket and 172 of them was convenience store. Segmented results Hypermarket hy·per·mar·ket n. A very large commercial establishment that is a combination of a department store and a supermarket. hypermarket Noun a huge self-service store [translation of French is gradually becoming the most important retail format of the Group. As at the end of 2005, total number of hypermarket directly operated by the Group increased to 97 from 49 in 2004. During the Period, segmented turnover for hypermarket reached RMB7.154 billion, the highest among different retail formats operated by the Group. The turnover for this format accounted for 49.98% of the Group's turnover, increased 51.65% when comparing with 2004, Supermarket is another main contributor of the Group's turnover. During the Period, total number of supermarket of the Group reached 1,553 with a segmented turnover of RMB5.643 billion, accounted for 39.42% of the Group's turnover, increased 13.92% when comparing with 2004. During the Period, the convenience store business of the Group continued to expand. The coverage of the Group's convenience stores The following is a list of convenience stores organized by geographical location. Stores are grouped by the lowest heading that contains all locales in which the brands have significant presence. extended from Shanghai to Beijing, Guangzhou, Dalian, Hanzhou and Ningbo cities. Total number of convenience store were 1,959 with a segmented turnover of RMB1.470 billion, accounted for 10.27% of the Group's turnover, increased 31.31% when comparing with 2004. Supply chain and logistics Modification of supply chain system is crucial for the improvement of the core competency A core competency is something that a firm can do well and that meets the following three conditions specified by Hamel and Prahalad (1990):
In 2005, online services were provided to our suppliers. As a result, the fulfillment rate of the suppliers' orders was greatly improved while 77% of these suppliers are satisfied with the new platform. It is believed that the new system will improve and perform better in the coming years. In addition, the Group also implemented a modernization modernization Transformation of a society from a rural and agrarian condition to a secular, urban, and industrial one. It is closely linked with industrialization. As societies modernize, the individual becomes increasingly important, gradually replacing the family, project on the room temperature center in Shanghai in order to optimize the operation process and introduce advanced logistics equipment. As a result, the distribution inaccuracy in·ac·cu·ra·cy n. pl. in·ac·cu·ra·cies 1. The quality or condition of being inaccurate. 2. An instance of being inaccurate; an error. rate and wastage wastage a loss of product or productivity; in terms of animal production includes losses due to deaths of animals, lowered production from survivors, including reproduction, and lost opportunity income. wastage Fetal wastage, see there rate of distribution were further decreased to 0.03% and 0.001% respectively. Warehousing capacity of the distribution center was enlarged and the efficiency of the entire supply chain and outlet order satisfaction levels were substantially improved. Building Customers Loyalty During the Period, the Group put strong emphasis on the promotion and management of its membership card scheme. As at the end of 2005, total number of Lianhua membership cardholders exceeded 5 million, providing the Group an important target group for its market and sales promotion. During the Period, the total consumption of Lianhua membership cardholders increased 7.83 percentage points when compared with 2004. Sales per ticket for the cardholders increased 15.83%. Nowadays, Lianhua membership card has already become the leading membership scheme of FMCG FMCG Fast Moving Consumer Goods industry in Shanghai and Zejian. Meanwhile, the Group has further enhanced its promotion on its corporate image and product brands. The Group took the recommendations about customer loyalty to further improve its competitive edges. On the one hand, the Group is dedicated to building an image of "Healthy, Safe and Hygiene" for its products, on the other hand, the Group was strongly engaged in the development of Lianhua branded products and as of 31 December, 2005, there were over 2,500 branded products. Grow to Solidify so·lid·i·fy v. so·lid·i·fied, so·lid·i·fy·ing, so·lid·i·fies v.tr. 1. To make solid, compact, or hard. 2. To make strong or united. v.intr. Leadership 2006 is a year in which opportunities and challenges co-exist. Competition will be fierce and market will be expanding. The Group will uphold its strategy of "growth centralization cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. " to further widen its advantages on dominated regions. The Group will also adapt feasible and cost-effective measures for merger and acquisition, while open new outlets selectively in cities and regions the Group already entered. We expect to open about 500 new outlets in 2006, in which in terms of gross area, 80% of the newly opened outlets will be centralized cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. in eastern China. For hypermarket, the focus of this year will be in the Yangzi River Delta A delta is a landform where the mouth of a river flows into an ocean, sea, desert, estuary, lake or another river. It builds up sediment outwards into the flat area which the river's flow encounters (as a deltaic deposit region. To support the above expansion plan, the Group will continue to implement its merger and acquisition strategy in China. The Group is planning to adapt various forms of merger and acquisition to develop its business in core regions more flexibly. The management will be more focused on accelerating consolidation after merger and acquisition to bring the positive effect of the merger and acquisition into full play. Furthermore, the Group will continue to review its franchise arrangements and to speed up the improvement of its supply chain system for franchisees. In 2006, The Group also targets to further improve the business performance of outlets via the enhancement of operation and management capabilities in order to maintain the trend of same-store growth. For hypermarket retail format, we will put our focus on the systemization sys·tem·ize tr.v. sys·tem·ized, sys·tem·iz·ing, sys·tem·iz·es To systematize. sys and standardization standardization In industry, the development and application of standards that make it possible to manufacture a large volume of interchangeable parts. Standardization may focus on engineering standards, such as properties of materials, fits and tolerances, and drafting of operation flow. For supermarket retail format, we will continue to promote the upgrading of business operation. In 2005, one-third of the directly-operated supermarkets in Shanghai (about 100 outlets) finished the upgrading. Convenience stores will continue to emphasize the enrichment of "contents" and continue to implement lean-process management. Further, the Group will work hard to build a stronger foundation for organic growth via the improvement in operating efficiency, cost control for the improvement of average profitability of single stores. Finally, the management of the Group will continue to dilute di·lute v. To reduce a solution or mixture in concentration, quality, strength, or purity, as by adding water. adj. Thinned or weakened by diluting. its cost through the sharing of resources including the sharing of supply chain and information system. The Group is also planning the expansion construction of logistics distribution center in Jiangsu to provide more timely distribution services for the hypermarkets and other outlets in Jiangsu province. "Looking ahead, we will continue to grow ourselves without deteriorating our quality and financial results. Lianhua's management strives to creating and enhancing our corporate value as our main duty. We will continue to implement stringent and scientific methodology to rationalize ra·tion·al·ize v. 1. To make rational. 2. To devise self-satisfying but false or inconsistent reasons for one's behavior, especially as an unconscious defense mechanism through which irrational acts or feelings are made to appear business process, to speed up the construction of supply chain system and to logistics center to cope with the increasing needs arose from business expansion. In addition, we will further promote the transformation and upgrading of supermarket retail format by way of business re-engineering and adjustment of product mix to stimulate the increase in same-store turnover. The management is committed to building Lianhua Supermarket the most recognized, most popular, most profitable and most valuable brand leader in China's retail industry. We believe that the intrinsic value Intrinsic Value 1. The value of a company or an asset based on an underlying perception of the value. 2. For call options, this is the difference between the underlying stock's price and the strike price. of our enterprise will be further reflected via the implementation of the above strategies and ultimately, bringing better returns for the shareholders." concluded Chairman Wang. About Lianhua Supermarket Lianhua Supermarket Holdings Co., Ltd. ("Lianhua Supermarket" or the "Company") is China's leading supermarket chain. Established in Shanghai in 1991, it is now a retail chain operator with a nationwide retail network. It has grown organically as well as through franchise arrangements and acquisitions. As of December 31, 2005, Lianhua Supermarket operated 3,609 stores in 21 provinces and municipalities. It operate the "Century Mart" chain of hypermarkets, "Lianhua" supermarkets and "Lianhua Quik" convenience stores. The Franchise Committee of the PRC Retail Chain Operators Association has recognized "Lianhua Supermarket" and "Lianhua Quik" through its awards for supermarket and convenience store excellence. Lianhua Supermarket was listed on the Hong Kong Stock Exchange The Hong Kong Stock Exchange (Traditional Chinese: 香港交易所, also 港交所; abbreviated as HKEX; HKSE: 0388 ) is the stock exchange of Hong Kong. on June 27, 2003. Remark Announcements of Lianhua Supermarket regarding the annual results 2005 will be placed on Hong Kong Economic Times Hong Kong Economics Times (HKET) is the largest Chinese-language financial newspaper in Hong Kong, with an average daily circulation of 82,000 copies [1], having been found in January 26, 1988. and South China Morning Post The South China Morning Post, together with its Sunday edition, the Sunday Morning Post, is a English-language newspaper of Hong Kong, with a circulation of 104,000. on 19 April, 2006. |
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