China Resources Retail business net profit down 60% percent

Based on the China Resources Enterprise Co. Limited Annual Report released on March 21, data shows that in 2013 the group's retail business amounted to HK $ 95.174 billion (about RMB 76.3 billion), an increase of 14% ; with net profit of about 1 billion Hong Kong dollars, a decrease of 65.2%; excluding valuation surplus and disposing after-tax impact of non-core assets, the net profit should be at an increase of 39.8% .

CRE retail business annouced last year that sales growth has mainly benefited from actively opening new stores. By the end of 2013, it is operating more than 4,600 stores in China, of which about 83% are company owned, the others are franchised. The Group's retail business of the same stores has a sales growth of 4.7% .

In 2013, China Resources Enterprise said that their group is committed to the development of its retail, beer, food and beverage, four core businesses. Last year, the Group successfully formed a retail joint venture with Tesco PLC (Tesco), and completed the acquisition of Kingway Brewery Holdings Limited’s ( Kingway ) beer business.

Lai Ni Hium, CFO, said that the agreement for a joint venture company with Tesco on the integration of the retail business in China was established last year, and the agreement is still pending government approval. Under the agreement, Tesco’s current operations of 134 stores in the mainland and 19 shopping malls will be injected into the joint venture. Tesco is to inject its assets and cash of HK $ 4,325,000,000 of newly issued shares to the joint venture company to subscribe, making Tesco Group and the joint venture company held at a 80% and 20 % stake.

Lai Ni Hium expects that the anti-trust review results will come out around May this year, and expects that from the third to the fourth quarter, Tesco business will contribute to our China business.

According to reports, on 20 March,Vanguard Zhuhai Nanping Store plan will be officially opened in the second half of this year, operating an area of about 20,000 square meters . A Vanguard official said that the Nanping Store is expected to service the 60,000 residents of Huafa Metro and other local communities .