chow tai fook jewellery group limitedcorporate.chowtaifook.com/en/ir/presentations/pre12corp.pdf ·...

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Object Foundation

Do not refresh this file

Chow Tai Fook Jewellery Group Limited

Presentation

2012

Strictly private and confidential

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Disclaimer

T

THESE MATERIALS HAVE BEEN PREPARED BY CHOW TAI FOOK JEWELLERY GROUP LIMITED OR A SUBSIDIARY (THE “COMPANY”) SOLELY FOR USE AT THIS PRESENTATION AND ARE NOT FOR

PUBLIC DISSEMINATION. THE SLIDES AND ANY OTHER MATERIALS USED IN THIS PRESENTATION ARE STRICTLY CONFIDENTIAL AND MUST BE TREATED AS SUCH BY THE ATTENDEES TO SUCH

PRESENTATION. THE INFORMATION CONTAINED IN THIS PRESENTATION IS BEING FURNISHED TO YOU SOLELY FOR YOUR INFORMATION AND MAY NOT BE TAKEN AWAY, FORWARDED, PUBLISHED

OR DISTRIBUTED, DIRECTLY OR INDIRECTLY, TO ANY OTHER PERSON (WHETHER WITHIN OR OUTSIDE YOUR ORGANIZATION/FIRM), IN WHOLE OR IN PART, FOR ANY PURPOSE AND MAY NOT BE

REPRODUCED IN ANY MANNER WHATSOEVER. ANY TAKING AWAY, FORWARDING, PUBLICATION, DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS

UNAUTHORIZED. BY ATTENDING THIS PRESENTATION OR ACCEPTING THESE MATERIALS, YOU ARE AGREEING, (i) THAT YOU HAVE READ AND AGREE TO COMPLY WITH THE CONTENTS OF THIS

NOTICE AND (ii) TO MAINTAIN ABSOLUTE CONFIDENTIALITY REGARDING THIS PRESENTATION AND THE INFORMATION DISCLOSED IN THESE MATERIALS AS WELL AS INFORMATION PRESENTED

ORALLY OR OTHERWISE DURING THIS PRESENTATION UNLESS SUCH INFORMATION IS PUBLICLY AVAILABLE. ANY FAILURE TO COMPLY WITH THE RESTRICTIONS MAY CONSTITUTE A VIOLATION

OF THE RELEVANT SECURITIES LAWS. THE DISTRIBUTION OF THIS DOCUMENT IN OTHER JURISDICTIONS MAY BE RESTRICTED BY LAW AND PERSONS INTO WHOSE POSSESSION THIS DOCUMENT

COMES SHOULD INFORM THEMSELVES ABOUT, AND OBSERVE, ANY SUCH RESTRICTIONS. CERTAIN INFORMATION IN THIS PRESENTATION, INCLUDING INFORMATION PRESENTED ORALLY OR

OTHERWISE, CONSTITUTES “CONFIDENTIAL INFORMATION”. BY ATTENDING THIS PRESENTATION AND ACCEPTING THIS DOCUMENT, THE RECIPIENT AGREES TO USE ANY SUCH CONFIDENTIAL

INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE POLICIES, CONFIDENTIALITY UNDERTAKING (IF ANY) AND APPLICABLE LAW. COPIES OF THIS DOCUMENT WILL BE COLLECTED AFTER THIS

PRESENTATION. THE INFORMATION CONTAINED IN THIS PRESENTATION DOES NOT CONSTITUTE OR FORM PART OF ANY OFFER FOR SALE OR SUBSCRIPTION OF OR SOLICITATION OR INVITATION

OF ANY OFFER TO BUY OR SUBSCRIBE FOR ANY SECURITIES OR OTHER INTERESTS OF THE COMPANY OR ITS HOLDING COMPANY OR ANY OF ITS SUBSIDIARIES IN ANY JURISDICTION OR AN

INDUCEMENT TO ENTER INTO ANY INVESTMENT ACTIVITY, NOR SHALL IT OR ANY PART OF IT FORM THE BASIS OF OR BE RELIED ON IN CONNECTION WITH ANY CONTRACTS, COMMITMENT OR

INVESTMENT DECISION WHATSOEVER. NO SECURITIES OF THE COMPANY MAY BE OFFERED OR SOLD IN THE UNITED STATES OF AMERICA WITHOUT REGISTRATION WITH THE UNITED STATES

SECURITIES AND EXCHANGE COMMISSION EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE US SECURITIES ACT

OF 1933, AS AMENDED. NO PUBLIC OFFERING OF THE COMPANY’S SECURITIES IS BEING MADE IN ANY JURISDICTION OUTSIDE HONG KONG. IN PARTICULAR, THE COMPANY DOES NOT INTEND TO

REGISTER ANY PORTION OF ANY OFFERING IN THE UNITED STATES OR TO CONDUCT A PUBLIC OFFERING OF ANY SECURITIES IN THE UNITED STATES. THIS PRESENTATION CONTAINS FORWARD-

LOOKING STATEMENTS. SUCH FORWARD-LOOKING STATEMENTS ARE BASED ON A NUMBER OF ASSUMPTIONS ABOUT THE OPERATIONS OF THE COMPANY AND OTHER FACTORS, MANY OF

WHICH MAY BE BEYOND THE COMPANY’S CONTROL. BY THEIR NATURE, FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES BECAUSE THEY RELATE TO EVENTS AND DEPEND

ON CIRCUMSTANCES THAT MAY OR MAY NOT OCCUR IN THE FUTURE. ACCORDINGLY, THE COMPANY’S ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY

SUCH FORWARD-LOOKING STATEMENTS (INCLUDING, BUT NOT LIMITED TO STATEMENTS RELATING TO THE GROUP’S ABILITY TO IMPLEMENT ITS BUSINESS STRATEGY, EXPECTED NEW STORE

OPENINGS, EXPECTED DIVIDEND DISTRIBUTIONS, EXPECTED CAPITAL EXPENDITURE AND EXPECTED USE OF PROCEEDS). IN ADDITION, EVEN IF THE COMPANY’S FINANCIAL POSITION, RESULTS

OF OPERATIONS AND CASH FLOWS AND THE DEVELOPMENT OF THE JEWELLERY INDUSTRY ARE CONSISTENT WITH THE FORWARD-LOOKING STATEMENTS CONTAINED IN THIS PRESENTATION,

THOSE RESULTS OR DEVELOPMENTS MAY NOT BE INDICATIVE OF RESULTS OR DEVELOPMENTS IN FUTURE PERIODS. IN SOME CASES, YOU CAN IDENTIFY THOSE FORWARD-LOOKING

STATEMENTS BY WORDS SUCH AS “COULD”, “MAY,” “PLAN,” “WILL CONTINUE,” “EXPECTS,” “ANTICIPATES,” “BELIEVES,” “INTENDS” OR SIMILAR WORDS. THE COMPANY AND ITS AFFILIATES,

ADVISORS AND REPRESENTATIVES HAVE NO OBLIGATION AND DO NOT UNDERTAKE TO UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW

INFORMATION, FUTURE EVENTS OR OTHERWISE. THE INFORMATION CONTAINED IN THIS PRESENTATION HAS BEEN COMPILED AS OF THE DATE OF THIS PRESENTATION, SPEAKS AS OF THE DATE

OF THIS PRESENTATION (OR EARLIER, IF SO INDICATED) AND WILL NOT BE UPDATED TO REFLECT MATERIAL DEVELOPMENTS WHICH MAY OCCUR AFTER THE DATE OF THIS PRESENTATION, AND

IS SUBJECT TO CHANGE, INCLUDING SUBSTANTIAL CHANGES, WITHOUT NOTICE. THE SLIDES FORMING PART OF THIS PRESENTATION HAVE BEEN PREPARED FOR THE PURPOSES OF PROVIDING

BACKGROUND INFORMATION ABOUT THE COMPANY. THIS PRESENTATION MAY CONTAIN, AMONG OTHER THINGS, INFORMATION AND STATISTICS RELATING TO THE JEWELLERY INDUSTRY. THE

COMPANY HAS DERIVED SUCH INFORMATION AND DATA FROM UNOFFICIAL SOURCES THAT IT BELIEVES ARE RELIABLE. THE COMPANY CANNOT ENSURE YOU THAT SUCH INFORMATION IS

ACCURATE OR COMPLETE. YOU SHOULD NOT PLACE UNDUE RELIANCE ON STATEMENTS IN THIS PRESENTATION REGARDING THE JEWELLERY INDUSTRY. THIS PRESENTATION MAY INCLUDE

MEASURES OF FINANCIAL PERFORMANCE WHICH ARE NOT A MEASURE OF FINANCIAL PERFORMANCE UNDER IFRS, SUCH AS ”EBITDA”. THESE MEASURES ARE PRESENTED BECAUSE THE

COMPANY BELIEVES THEY ARE USEFUL MEASURES TO DETERMINE THE COMPANY’S OPERATING CASH FLOW AND HISTORICAL ABILITY TO MEET DEBT SERVICE AND CAPITAL EXPENDITURE

REQUIREMENTS. “EBITDA” SHOULD NOT BE CONSIDERED AS AN ALTERNATIVE TO CASH FLOWS FROM OPERATING ACTIVITIES, A MEASURE OF LIQUIDITY OR AN ALTERNATIVE TO NET PROFIT OR

INDICATORS OF THE COMPANY’S OPERATING PERFORMANCE ON ANY OTHER MEASURE OF PERFORMANCE DERIVED IN ACCORDANCE WITH IFRS. BECAUSE IT IS NOT AN IFRS MEASURE, “EBITDA”

MAY NOT BE COMPARABLE TO SIMILARLY TITLED MEASURES PRESENTED BY OTHER COMPANIES. THE INFORMATION CONTAINED IN THIS PRESENTATION HAS NOT BEEN INDEPENDENTLY

VERIFIED. NO REPRESENTATION, WARRANTY, OR UNDERTAKING EXPRESS OR IMPLIED, IS MADE AS TO, AND NO RELIANCE SHOULD BE PLACED ON, THE FAIRNESS, ACCURACY, COMPLETENESS

OR CORRECTNESS OF ANY INFORMATION OR OPINION CONTAINED HEREIN. IT IS NOT THE INTENTION TO PROVIDE, AND YOU MAY NOT RELY ON THIS DOCUMENT AS PROVIDING, A COMPLETE OR

COMPREHENSIVE ANALYSIS OF THE COMPANY’S FINANCIAL OR TRADING POSITION OR PROSPECTS. NONE OF THE COMPANY OR ANY OF ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS,

SHAREHOLDERS, AFFILIATES, SUBSIDIARY, ADVISORS OR REPRESENTATIVES SHALL BE IN ANY WAY RESPONSIBLE FOR THE CONTENTS HEREOF, OR SHALL BE LIABLE (IN NEGLIGENCE OR

OTHERWISE) FOR ANY LOSS HOWSOEVER ARISING FROM ANY USE OF THIS DOCUMENT OR THE INFORMATION CONTAINED IN THIS PRESENTATION OR OTHERWISE ARISING IN CONNECTION

THEREWITH.

1

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Prudent market potential in the PRC

2

Population growth

From 2006 to 2010, total population increased from

1,330mm to 1,360mm at a CAGR of 0.5%

1

Urbanisation growth

From 2006 to 2010, Chinese urbanisation rate was

higher than 40%, increasing from 43.9% in 2006 to

49.7% in 2010

2

Disposable income growth

From 2006 to 2010, per capita disposable income of

the PRC increased from RMB11,759 to RMB19,109

at a CAGR of 12.9%

3

Rise of middle class1

The urban population of middle class in the PRC is

expected to increase from approximately 235mm in

2010 to nearly 330mm by 2025

4

Jewellery ownership

In 2009, per capita jewellery ownership is 1/5 of Hong

Kong and less than 1/10 of the US and Europe

5

Source: Frost & Sullivan Report

1 People with annual disposable income ranging from RMB16,300 to RMB37,300

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Strong fundamentals in the PRC economy

Continuing increase in spending on consumer goods in the PRC

9,169.2 10,705.2 13,018.5 15,041.118,839.8

22,691.027,341.7

32,945.5

39,697.8

47,834.1

2006 2007 2008 2009 2010 2011E 2012E 2013E 2014E 2015E

3,670.3 4,353.9 4,951.0 5,344.6 6,091.9 6,825.7 7,656.5 8,588.4 9,633.8 10,806.511,267.7 14,157.5 17,035.1 18,600.4 22,081.5 25,279.3

28,980.8 33,224.438,089.3

43,666.5

11,019.713,385.8

15,699.3 16,915.819,584.6

22,105.724,898.0

28,036.8

31,564.1

35,527.0

90,000.0

79,287.2

69,849.6

61,535.354,210.7

47,758.040,860.837,685.4

31,897.225,957.7

2006 2007 2008 2009 2010 2011E 2012E 2013E 2014E 2015E

Tier one cities Tier two cities Tier three and other lower tier cities

Strong demographics and proliferation of wealth across the PRC led by growth in Tier II cities

Tier I cities: 2010–2015E CAGR:

Tier II cities: 2010–2015E CAGR:

Tier III and other lower tier cities: 2010–2015E CAGR:

12.1%

14.6%

12.6%

PRC’s nominal GDP by city tier (HK$ billion)

Retail sales of consumer goods in the PRC (HK$ billion)

3 Source: Frost & Sullivan

Data originally presented in RMB; RMB/HK$ exchange rate of 1.2 applied to all figures

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Source: Frost & Sullivan; Euromonitor; Datamonitor; McKinsey Insights China; EconTrends

Note: For all figures originally presented in RMB, a RMB/HK$ exchange rate of 1.2 was applied 1 Luxury goods include fashion ready to wear, leather goods/handbags, and high-end watches and jewellery (McKinsey Insights China) 2 Based on health & personal care net revenue in the PRC (EconTrends) 3 The food & beverage market is estimated as the aggregate of PRC’s packaged food, hot drinks and soft drinks industries (Euromonitor) 4 Food retail is estimated as grocery retail market size in the PRC (Euromonitor) 5 Alcohol market is estimated as the aggregate of PRC’s beer and spirits market; CAGR from 2010 to 2014 (Datamonitor)

The PRC jewellery sector has one of the most exemplary

growths in the PRC’s consumer / retail space

18.0%

13.3%11.7%

9.1%

6.8%

38.6%

Jewellery

retail

High-end

Luxury goods1 Health &

Personal Care2 Food retail4

Fastest growing segment by a wide margin

Alcohol5

Average:

11.8%

2010

Market size

(HK$ bn) 302.2 1,428.4 209.7 3,801.6 600.4

Food &

beverage3

216.0

2010-2015E CAGR of various segments across the consumer and retail space in the PRC

4

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Jewellery retailing industry in the PRC is poised for strong

growth

5 Source: Frost & Sullivan

Data originally presented in RMB; RMB/HK$ exchange rate of 1.2 applied to all figures

Sales of jewellery in the PRC is expected to grow on the back of strong performance of gold products

54.1 70.7 91.9 112.2 155.7 220.5 309.3432.6

604.6843.1

60.585.1

118.8

165.3

229.9

318.9

117.4158.8

214.0

287.9

386.0

21.4 27.8 36.0 43.8

86.033.4 42.5 53.7 64.2108.9 141.0 181.6 220.2

302.2423.0

586.9

811.9

1,122.4

1,548.0

2006 2007 2008 2009 2010 2011E 2012E 2013E 2014E 2015E

Gold products Platinum/K-gold products Gem-set jewellery

Gold products: 2010–2015E CAGR:

Platinum/K-gold products: 2010–2015E CAGR:

Gem-set jewellery: 2010–2015E CAGR:

40.2%

39.5%

35.0%

44.1 55.1 68.3 78.5 101.7 136.1 180.1 236.9 310.6 405.998.6 138.3189.8

258.3353.0

481.0

101.9148.6

217.0

316.7

458.8

661.1

43.633.7 58.0 72.669.155.342.331.1

108.9 141.0 181.6 220.2302.2

423.0

586.9

811.9

1,122.4

1,548.0

2006 2007 2008 2009 2010 2011E 2012E 2013E 2014E 2015E

Tier one cities Tier two cities Tier three and other lower tier cities

Tier III and other lower tier cities are expected to lead the growth of the jewellery retail sector in the PRC

Tier I cities: 2010–2015E CAGR:

Tier II cities: 2010–2015E CAGR:

Tier III and other lower tier cities: 2010–2015E CAGR:

31.9%

37.3%

45.3%

Retail value of jewellery market in the PRC by product (HK$ billion)

Retail value of jewellery market in the PRC by city tier (HK$ billion)

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Broad-based distribution channels ensure accessibility for

consumers in the PRC jewellery market

6

Proliferation of the department store channel (2010) The importance of both operation models (2010)

Self-operated

Franchised

44.7%

30.1%

13.7%

9.8%

1.7%

Department

stores

Stand-alone

branded stores

Stores in

shopping mall

Specialised

markets

Others (including

internet)

Greater confidence and comfort when purchasing

from department stores in the PRC

Adopted by retailers when penetrating into lower tier

cities due to low cost of expansion and more

targeted customer traffic

Jewellery sales from department stores is forecasted

to grow at a 2010-2015E CAGR of 40.1%

Franchising has gained prominence as a cost-

effective and efficient form of expansion,

especially in lower tier cities

Self-operated stores remain important due to:

– Greater operational control

– Increased closeness to end customers

– Higher margin and profit potential due to

elimination of the wholesale-retail spread

68.0%

32.0%

Source: Frost & Sullivan

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Overview of China Jewellery Market: Ranking of Top 10

Players 2010

Jewellery market share by revenue in the

PRC (2010)

Jewellery market share by revenue in Hong

Kong and Macau (2010)


Top 10

players

57.5%

Further consolidation

from top 10 players

expected over 2010-2015E

as a result of product

portfolio and distribution

channel expansion

Top 10

players

51.6%

Further consolidation

from top 10 players

expected over 2010-2015E

as a result of product

portfolio expansion and

rising demand for high-

quality jewellery products


Note: Only includes companies whose revenues exceed RMB 500mm 7

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Chow Tai Fook (“CTF”) at a glance

Largest jeweller in the PRC, Hong Kong & Macau

12.6% market share in the PRC 20.1% market share in Hong Kong & Macau

82 years of history

“Mass Luxury” segment offering diamond, gold, other jewellery

products & watches

Vertically integrated business model from procurement, diamond

cutting and polishing to sales network of 1,500+ POS

Achieved 53% revenue growth in FY11 and 79% in 1HFY12

8

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Our unrivalled competitive strengths

Iconic & trusted brand with over 80 years of

heritage

Loyal, highly-experienced & dynamic

management team

Vertically integrated business model

Extensive retail network with deep access

to rising consumer spending

Broad product portfolio with a focus on the

mass luxury segment

真誠sincerity

永恒eternity

真誠sincerity

永恒eternity

真誠sincerity

永恒eternity

真誠sincerity

永恒eternity

9

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Source: Bain & Company, November 2010

Iconic & trusted brand in the Greater China region with

over 80 years of heritage

“Top Three Brands Most Likely to be Purchased in 2010”

in the PRC on jewellery brands

10

Cartier Tiffany & Co.

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Loyal, highly-experienced & dynamic management team that is unparalleled in the jewellery industry in the Greater China region

Management team spans 3 generations using modern corporate management methods

Core management team has over 25 years of seamless cooperation

3,000 Management,

general & admin staff

6,000 R&D and production staff

16,000 Sales force

11

Adrian Cheng

Executive Director

>4 yrs

Conroy Cheng

Executive Director

>4 yrs

Hamilton Cheng

Finance Director

>7 yrs

Dato’ Dr. Cheng Yu-Tung

Honorary Chairman and Non-executive Director

>63 yrs

Dr. Henry Cheng

Chairman and

Executive Director

>40 yrs

Kent Wong

Managing Director

>34 yrs

Chan Sai-Cheong

Executive Director

>26 yrs

Albert Chan

Executive Director

>34 yrs

Peter Suen

Executive Director

>25 yrs

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Object Foundation


Vertically integrated business model giving us effective

operation control & efficiencies

Retail

Upstream Midstream Downstream

Production

4 3

South Africa

1 2 Australia

1

2

2

3

POS in the PRC, HK,

Macau, Malaysia,

Singapore & Taiwan

Shunde

US 1

Europe 1

4

Shunde, Shenzhen,

Hong Kong

Our operation is supported by our advanced IT technology – management has real time access to POS data

DTC Sightholder

Rio Tinto Diamantaire

12

Raw material

procurement

Product design

& development

3 2 1

Diamond cutting

& polishing

1 Includes the procurement of rough and polished diamonds

Colo

r 1

R151

.G114

.B10

3

Colo

r 2

R187.G

163.B

155

Colo

r 3

R232.G

166.B

179

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r 4

R195

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78

Hig

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White

R255.G

255.B

255

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62

Object Foundation


HK, Macau & other

Asian markets

89

Extensive retail network with deep access to rising

consumer spending in the Greater China region

1,500+ POS covering over 320 cities

Target: 2,000+ jewellery POS by 2016

Tier I

216

Tier II

727

Tier III

& others

474

Retail network (Total: 1,506)

Sales channel*

Concessionaire

counters

82%

Others

18%

Operation model

Self-

operated

70%

Franchised

30%

13 Note: Company information as of 1HFY12

* Only include self-operated POS

Colo

r 1

R151

.G114

.B10

3

Colo

r 2

R187.G

163.B

155

Colo

r 3

R232.G

166.B

179

Colo

r 4

R195

.G51.B

78

Hig

hlig

ht

R238.G

119.B

0

White

R255.G

255.B

255

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62

Object Foundation


Our product offerings capture customers’ life cycle

Potential in the wedding market

Over 30% of the population in the PRC in 2010 was of the age group for

marriage (age 20 to 39)

Over 12 million marriages were registered in the PRC in 2010

The no. of registered marriage is forecasted to grow at a CAGR of 9.2%

from 2010 to 2015E

Our product offerings:


Touches on every stage of our customers’ life cycle

Birth Teenage Working Woman Anniversary Marriage

14

Colo

r 1

R151

.G114

.B10

3

Colo

r 2

R187.G

163.B

155

Colo

r 3

R232.G

166.B

179

Colo

r 4

R195

.G51.B

78

Hig

hlig

ht

R238.G

119.B

0

White

R255.G

255.B

255

Text

R0.G

0.B

0

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2nd/3

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62

Object Foundation


Our focus: Mass luxury segment

Largest segment of the

jewellery market

► Accounted for >56% in the

PRC in 2010

► Strong 2010 – 2015E CAGR

of >39%


15

Price range

HK$2k

HK$100k

High-end Luxury

Mass Luxury

Young Line

No.1 in jewellery brand awareness

in the PRC, Hong Kong & Macau

73.9%

74.4%

PRC

HK &

Macau

Source: Unaided brand awareness survey, Frost & Sullivan Report, November 2011

Colo

r 1

R151

.G114

.B10

3

Colo

r 2

R187.G

163.B

155

Colo

r 3

R232.G

166.B

179

Colo

r 4

R195

.G51.B

78

Hig

hlig

ht

R238.G

119.B

0

White

R255.G

255.B

255

Text

R0.G

0.B

0

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2nd/3

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62

Object Foundation


We outperformed the jewellery market in the PRC, Hong

Kong and Macau during the Track Record Period

16

Turnover (HK$bn)

Source of market growth data: Frost & Sullivan Report

Significantly outperformed

the market when the

economy recovered

Outgrew the market even

at the back of financial

crisis

CTF growth vs market growth

Continued to outperform

the market by an even

wider margin in 1HFY12

1HFY 12

FY 11

FY 10

Colo

r 1

R151

.G114

.B10

3

Colo

r 2

R187.G

163.B

155

Colo

r 3

R232.G

166.B

179

Colo

r 4

R195

.G51.B

78

Hig

hlig

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R238.G

119.B

0

White

R255.G

255.B

255

Text

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62

Object Foundation


Robust top-line performance driven by strong organic

growth

Same Store Sales Growth¹ (%)

1 Same Store Sales refers to turnover from our self-owned POS existing as at the end of the relevant financial year/period and which have been opened for at least 24 consecutive

months (for FY2010 & FY2011) / 18 consecutive months (for 1HFY2012) immediately prior to the end of that financial year/period. Turnover from our wholesale channel (i.e. sales

to franchisees) and other direct sales (such as sales from promotional events) are excluded.

POS count

17

Colo

r 1

R151

.G114

.B10

3

Colo

r 2

R187.G

163.B

155

Colo

r 3

R232.G

166.B

179

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R195

.G51.B

78

Hig

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R238.G

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White

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255

Text

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62

Object Foundation


Optimal sales strategy and product portfolio

Turnover by product category Turnover by channel Turnover by geography

Retail

82%

Wholesale

18%

Gold

products

53%

Watches

7% Platinum/

K-gold

16%

Gem-set

jewellery

24%

18

The PRC

56%

HK, Macau

and other

Asian Markets

44%

Settled in

RMB/China

UnionPay

1HFY 12 turnover: HK$24bn

49% of total HK

and Macau

retail sales

Colo

r 1

R151

.G114

.B10

3

Colo

r 2

R187.G

163.B

155

Colo

r 3

R232.G

166.B

179

Colo

r 4

R195

.G51.B

78

Hig

hlig

ht

R238.G

119.B

0

White

R255.G

255.B

255

Text

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2nd/3

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R155

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62

Object Foundation


Strong and stable profitability

Net profit (HK$bn) Gross profit (HK$bn)

Stable gross profit margin Improving net margin

19

Colo

r 1

R151

.G114

.B10

3

Colo

r 2

R187.G

163.B

155

Colo

r 3

R232.G

166.B

179

Colo

r 4

R195

.G51.B

78

Hig

hlig

ht

R238.G

119.B

0

White

R255.G

255.B

255

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62

Object Foundation


Inventory turnover analysis

Inventory turnover days1

1 Inventory turnover days = average inventory / cost of goods sold x 365 (for FY 09, FY 10 and FY 11) and 183 (for 1HFY 12)

20

Sales growth 25% 53% 79%

Colo

r 1

R151

.G114

.B10

3

Colo

r 2

R187.G

163.B

155

Colo

r 3

R232.G

166.B

179

Colo

r 4

R195

.G51.B

78

Hig

hlig

ht

R238.G

119.B

0

White

R255.G

255.B

255

Text

R0.G

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2nd/3

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62

Object Foundation


Future strategies

Continue to recruit, develop and retain talent 1

Increase Same Store Sales and continue to encourage repeat

customer purchases

2

Further expand jewellery POS network and geographical footprint

in the Greater China region

3

Focus on diversifying sales channels to broaden customer base 4

Further enhance upstream vertical integration business model 5

Further enhance the synergy between jewellery business and

watch business

6

21

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