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BUSINESS
PERFORMANCE
For the year ended 31st March, 2007, the Group recorded
another encouraging growth in terms of both turnover and
profit attributable to shareholders. Profit attributable
to shareholders has for the 3rd consecutive year
attained a double-digit growth to
HK$370 million. As
compared with that of last year, turnover was
substantially increased to HK$3.89 billion after
consolidating, for the first time, the full year results
of our wholly-owned subsidiary of Manchu Wok.
To share the joy of our sustainable growth with our
shareholders, I would recommend to the Board to propose
a final dividend of 30 HK cents per share. Together with
the interim dividend paid earlier, a total dividend of
42 HK cents per share would have been
repatriated to our
shareholders for the whole year, with substantial
increase of 20%, representing an ever-increasing
dividend payout ratio of 62%.
BUSINESS REVIEW
Over the years, the Group’s business horizon has kept on
expanding both in business portfolio, customer base and
geographical coverage, tapping into strategic growth
markets here in Hong Kong as well as in the People’s
Republic of China and North America.
In our familiar home territory here in Hong Kong, our
core businesses in the quick service and the specialty
restaurant sectors continued to prosper. Our long
established brands such as Café de Coral and
The Spaghetti House, through aggressive
marketing
campaigns and development program, have gained much
solid ground both in market share and brand preference.
It was gratifying to witness the fruit bearing effort of
our innovative product launches and marketing
initiatives, which together contribute to the
encouraging performance of our various restaurant brands
in Hong Kong both in terms of volume and value.
Indeed, the
encouraging performance in the local restaurant sectors
in year 2006 were aided by the buoyant sentiment in the
capital and consumer markets. Capitalizing on such
improved business environment, and riding on our own
branding power and longestablished business reputation,
we further accelerated the pace of our branch
development in Hong Kong by opening a record high of 23
new outlets in the year, maintaining a firm grip of our
market leadership in an ever-increasingly competitive
landscape.
On the
institutional front, our Luncheon Star has also
firmly secured its market leading position in the school
catering sector. Being accredited with “HACCP”, “ISO
9001” and the strictest “ISO 22000” food safety system,
which is the first of its kind in the Hong Kong school
catering industry, Luncheon Star not only has
become an established preference among parents and
teachers in the selection of school meal caterers, but
has also clearly demonstrated our commitment to the food
safety and corporate responsibility to the local
community.
In the PRC, we
continued with our proactive expansion initiatives in
this market. As of today, the total number of our
operating units in China is well over 133. Encouraged by
the performance of our Café de Coral in the
Southern China region both in the first and second tier
cities, we adhere to our aggressive branch development
program by bringing the total number of stores in the
region to 31, where it has now become not only a sizable
business growth platform but has developed as another
meaningful profit contributor to the Group.
In Eastern China,
we are encouraged to witness a significant business
improvement in our 50% owned restaurant chain New
Asia Dabao. At the same time, we have also commenced
a development program for Café de Coral in the
region, which at this stage have inevitably incurred
certain oneoff pre-opening expenses and development
costs. Despite the initial growing pain, we remained
positive and committed to this business platform as it
is an indispensable development strategy for unlocking
the vast business potential in the Yangtze River Delta
Region.
Across the ocean,
we are pleased to report substantial improvement in our
North American business Manchu Wok. The
substantial reduction in loss is a positive signal for
us that we are heading toward the right direction in
turning around the business. We have decided to take
this opportunity to further write-off certain assets as
we believe that it would be of long term benefits to all
our stakeholders to adopt the most stringent and prudent
accounting principle. The loss sustained by this
business has drastically reduced for the year as
compared with the year before. In fact, on the operating
level, we have already witnessed an encouraging business
turnaround with a slight profitability. As we are moving
in the right direction, we envisage that our North
American business will be a market of great potential
for the Group in the years ahead.
BUSINESS STRATEGIES
Throughout the
years, we have never let go of our relentless effort to
explore the opportunities presented to us and create
value to our customers in various segments of the
catering industry, at home and abroad. Our strategies
are aimed to enlarge our market share in the catering
industry as a whole and to establish a balanced business
portfolio against waves of fierce competition.
We remain
committed to sustainable growth in our group of business
and adhere to our core competence in the restaurant
business to tap into the growing catering industry in
Hong Kong and abroad. The Group’s recent acquisition of
a strategic stake in the “Tao Heung”, a leading Chinese
restaurant group here in Hong Kong and Southern China,
exemplifies our continuing effort in this regard.
As encouraged by
the business performance both in Hong Kong and in
Southern China, we decide to devote more resources on
our back up infrastructures for our rapid development in
the region. In addition to the aggressive branch
development program which has already been in place, we
are fully aware of the need to expand on our 17 years
old central food processing plant, in order to satisfy
the ever-growing market demand for our business in the
region. To this end, we are rigorously looking for
suitable site to establish a new central food processing
plants both in Hong Kong and in the Pearl River Delta
Region. We believe that these much-needed
infrastructures would enhance our competitive edge in
the short run and our market dominance in the longer
term.
In June, 2007, the Group has acquired approximately
6,500 sq. feet property in Admiralty Centre, Hong Kong
at a total consideration of HK$60 million. The Group
aims to continue its policy of securing sites at
strategic location on a self-owned basis. The
acquisition not only opens up another stream of rental
revenue to the Group but also alleviates us from the
soaring rental escalation which we would anticipate at
this strategic location.
BUSINESS GOVERNANCE
Maintaining high standard of corporate governance is one
of the key elements to success for any business
enterprise. The Group will continue to promote a
committed culture of corporate governance so as to
reflect the fundamental values underlying the principles
of accountability, transparency and independency. I
would like to draw your attention to the section
“Corporate Governance and Corporate Responsibility
Report” of the Company’s 2007 Annual Report for details
about the Group’s attainment on corporate governance
during the year.
As always, people
are key to deliver excellence in business. We have set
up an independent “Executive Development Board” for
purpose of succession planning and for selecting and
equipping our people with the skill-sets and business
perspective for a sustainable development growth in our
various global business platforms.
To conclude, I would like to express my heartfelt
gratitude to every member of our staff and management.
Without their commitment and perseverance during the
past year, it is not possible for the Group to achieve
another milestone in our business performance.
Chan Yue
Kwong, Michael
Chairman
Hong Kong, 10th July, 2007
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