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| Corporate Profile |
The principal activities are operation of restaurants; manufacture and sales of noodles and related products; and investment holding.
Business Review - For the year ended December 31, 2012
For the year ended 31 December 2012, the Group's turnover decreased from approximately HK$3,075 million in 2011 , by approximately 1.0% to approximately HK$3,043 million in 2012. The gross profit of the Group reached approximately HK$2,022 million, an decrease of approximately 3.0% from last year. In particular, profit for the year of the Company decreased by approximately 54.9% and profit attributable to the owners of the Company decreased by approximately 55.9% to approximately HK$154 million from approximately HK$350 million last year. Net profit margin also decreased from approximately 11 .4% last year to approximately 5.1%. This showed that profitability of the Group affected by the Diaoyu Island dispute during the year. Correspondingly, basic earnings per share dropped from HK32.64 cents last year to HK14.37 cents per ordinary share.
Given the decline of the current operation of the Company during the year, the Board recommended a final dividend of HK1.40 cents and a special dividend of HK10.80 cents per ordinary share for the year ended 31 December 2012 as a return to the shareholders.
The powerful support from its production bases is an integral factor for the sustainable and steady expansion of the Group's chain restaurant network. As at 31 December 2012, the Group has two major production bases in Shanghai and Shenzhen, and 7 food manufacturing and processing centres throughout China, the Group also steadily pursued the construction of three new production bases in order to accommodate the pace and demand from the planned expansion of its fast causal restaurant (¡§FCR¡¨) network.
During the year, the Group decelerated its pace for the expansion of FCR network as planned. The Group adopted more focused strategies in its development, and continued to expand the restaurant network and deepened the density in mature markets, such as Jiangsu, Zhejiang and Shanghai.
During the year, the Group's cost of inventories consumed as a proportion to turnover was approximately 33.6%, indicating an increase of approximately 1.4 percentage points from that of the corresponding period last year. Accordingly, gross profit margin decreased from approximately 67.8% last year to approximately 66.4% in 2012. The Company leveraged on the adjustment of manual prices and adoption of means of strategic stocking to stabilize the cost of inventories to the maximum extent. In addition, although prices of certain raw materials are currently rising, the Group is confident that this pressure can be effectively mitigated by ingredient diversification. Together with further optimization of purchasing channels, the Group will be able to maintain a relatively high and stable gross profit margin.
During the year, the Group's labour costs accounted for approximately 24.2% of the turnover, which was approximately 3.0 percentage points higher than that of the corresponding period of last year. During the year, due to the standard of minimum wage in a number of provinces and municipalities in China successively was increased; the Group adjusted the wages of staff according to relevant law and regulations. In addition to this, the Group also implemented a new incentive bonus scheme and new human resources policy to the operational level staff, leading to an increase in labour costs.
During the year, rental and related costs as a proportion to turnover of the Group was approximately 15.7%, which was approximately 1.2 percentage points higher than that of corresponding period last year. During the year, the Group maintained stringent criteria in location selection for new restaurants to ensure the rate of success of the new establishment. Also, a large number of medium-and smallsize restaurants were developed so as to enhance the output per unit area. On the other hand, with our branding effect becoming stronger, the Group has secured fixed leases on a long-term basis. Such an increase was mainly attributable to the fact that the slower turnover growth for the period.
However, due to the slow recovery of stores sales, the fixed component in the rental structure will account for a larger portion. Captured with the last year, so that the ratio of the rental and related expenses against turnover of Group became higher.
By leveraging on the business opportunities arising from the gradual recovery of the F&B market, the Group has timely introduced a number of enriched and attractive marketing activities, the results of which within expectation. During the year, the Group featured the promotional sales of various attractive premiums. The feedback was excellent and the promotions facilitated an increase in transaction amount. The traditional redemption activities further improved the sales profit margin. These activities did not only encourage new and existing customers to visit the restaurants, but also helped the Group to fully benefit from the market recovery.
The highly effective operation of over 660 restaurants under the Group would not be achieved without our efficient management and intensive staff training. During the year, the Group placed emphasis on the guidance and training of restaurant managers and regional supervisors. The operation efficiency of each restaurant was enhanced through constant upgrading of its basic management level. The Group also launched inter-restaurant competitions and new incentive bonus scheme so as to fully mobilize its staff.
Retail Chain Restaurants
In 2012, the Group's major business and primary source of income continued to stem from the retail chain restaurant business. During the year, the Group's restaurant business income recorded approximately HK$2,936,766,000 (2011 : HK$2,959,743,000), accounted for approximately 96.5% (2011 : 96.3%) of the Group's total revenue.
Sales of Packaged Noodle and Related Products
The manufacturing and sales of packaged noodle products under the Ajisen brand is one of the Group's two main businesses and is a beneficial complement to the major business of FCR network operation. These packaged noodle products are manufactured solely by the Group. Besides they are supplied to the chain restaurants of the Group, they are also sold through diversified channels, including supermarkets and department stores, which further enhanced the awareness of the Ajisen brand.
For the year ended 31 December 2012, revenue from the sales of packaged noodle and related products was approximately HK$106,396,000 (2011 : HK$11 5,235,000), accounted for approximately 3.5% (2011 : 3.7%) of the Group's total revenue. The Group has an extensive distribution network for the packaged noodle and related products in China. As of 31 December 2012, the total number of points-ofsale in this network reached approximately 8,000, which was the same compared to the corresponding period in last year. The distribution network covers over 30 cities in China. These distributors include nationwide retailers such as Wal-Mart, Carrefour and Metro, and regional retailers such as China Resources Vanguard, Sanjiang in Ningbo and Century Lianhua, as well as reputable convenient chain stores such as Allday, Kedi and C-Store.
However, due to the slow recovery of stores sales, the fixed component in the rental structure will account for a larger portion. Captured with the last year, so that the ratio of the rental and related expenses against turnover of Group became higher.
Business Outlook - For the year ended December 31, 2012
By leveraging on the business opportunities arising from the gradual recovery of the F&B market, the Group has timely introduced a number of enriched and attractive marketing activities, the results of which within expectation. During the year, the Group featured the promotional sales of various attractive premiums. The feedback was excellent and the promotions facilitated an increase in transaction amount. The traditional redemption activities further improved the sales profit margin. These activities did not only encourage new and existing customers to visit the restaurants, but also helped the Group to fully benefit from the market recovery.
The highly effective operation of over 660 restaurants under the Group would not be achieved without our efficient management and intensive staff training. During the year, the Group placed emphasis on the guidance and training of restaurant managers and regional supervisors. The operation efficiency of each restaurant was enhanced through constant upgrading of its basic management level. The Group also launched inter-restaurant competitions and new incentive bonus scheme so as to fully mobilize its staff.
Source: Ajisen (China) (00538) Annual Results Announcement
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| Chairman |
Poon Wai |
Issued Capital (shares) |
1,088M |
| Par Value |
HKD 0.1 |
Market Capitalisation (HKD) |
8,619M |
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