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| Business Turnaround with Net Profit at HK$59,477,000 |
HONG KONG, June 20, 2011 - (ACN Newswire) - Longrun Tea Group Company Limited ("Longrun Tea Group" or the "Group"; SEHK: 2898) announced its annual results for the year ended 31 March 2011.
Key Highlights
-- Turnover soared over 147% to HK$394,955,000 driven by contributions from the tea and other food product business
-- Business turn-around with profit attributable to shareholders reached HK$59,477,000
-- Earnings per share increased to HK 4.13 cents
For the year ended 31 March 2011, the Group reported a substantial growth in revenue and executed a successful business turnaround. Revenue soared 147% to approximately HK$394,955,000 (2009/10: HK$160,121,000), mainly attributable to the favourable performance of the tea and other food products business. Gross profit was HK$156,130,000, an increase of 107% compared to HK$75,489,000 last year.
The Group's business turnaround resulted in profit for the year attributable to owners of the Company amounting to HK$59,477,000 (2009/10: Loss for the year attributable to owners was HK$30,614,000). The improvement was mainly attributable to the contributions of the Group's tea and other food products, which started to bear fruit during the year under review. Basic earnings per share were HK4.13 cents against a loss per share of HK3.07 cents in the previous fiscal year.
The Group continued to maintain a healthy liquidity position and has sufficient financial resources to meet ordinary operational and capital expenditure requirements. As at 31 March 2011, the Group had approximately HK$118,232,000 in cash and cash equivalents, substantially increased from HK$44,262,000 as of 31 March 2010.
Dr. Chiu Ka Leung, Chairman of Longrun Tea Group Company Limited, said "We are very pleased that the Group reported substantial improvements in its financial results and achieved business turnaround which was mainly due to its diversification into the tea market in China. During the year under review, we have taken advantage of the positive trend in the tea market by actively growing the distribution channels of "Longrun" branded tea and other food products during the year which helped us better penetrate across the PRC market."
Tea and other food products business
During the year under review, the Group had put its strategic emphasis on distributing tea and other food products under the well-established "Longrun" brand in the PRC market, and leveraging the enhanced awareness of the "Longrun" brand manifest in these endorsements to further grow its distribution network and customer base. The Group has been expanding its distribution network in the first- and second-tier cities in the PRC, enabling "Longrun" branded products to better penetrate across the country. These efforts started bearing fruit and generated revenue of HK$347,125,000, representing 88% of the Group's total revenue.
In addition, the Group's acquisition of "Tea Story" - a franchised operation of trendy teahouses in the PRC which was completed in October 2010 has started generating income for the Group during the year under review. As at 31 March 2011, "Tea Story" network consisted of 508 franchised teahouses. The Group plans to expand its Tea Story network by adding 300 more stores in the upcoming year in major cities such as Beijing, Shanghai, Guangzhou, Xiamen, etc, mainly targeting the younger generation by providing a large variety of trendy food and beverage products including carbonated tea, cocoa beverages, fruit drinks, shakes, slushes and Taiwanese snacks and light refreshments.
The Group's first mega retail outlet in Kunming which was opened in July 2010 also delivered a satisfactory performance during the year under review. Sales from this outlet accounted for about 31% of the Group's total revenue. With a floor area of more than 25,000 square feet and operating 24 hours a day with close proximity to Kunming Wujiaba International Airport, this mega retail outlet, targeting both domestic and international tourists who are attracted by the renowned high quality of Yunnan teas, has benefitted from the robust growth of tourism in Yunnan Province.
Healthcare and Pharmaceutical Business
During the year under review, the business and operations of the Group's healthcare and pharmaceutical products business continued to make a steady contribution. Revenue from this division was approximately HK$47,830,000 (2009/10: HK$37,314,000), accounting for about 12% of the Group's total revenue.
Looking ahead, the Group plans to strengthen the leading position of its tea and other food products business in the PRC by expanding its sales and distribution network across the country. The Group has been promoting the traditional tea drinking culture among the younger generation and aims to boost its presence in the trendy teahouse market sector by expanding the network of "Tea Story" trendy teahouses in the PRC. In addition, the Group will further leverage its unique location advantage to tap into the tourist-related market in Yunnan Province and replicate this successful business model where applicable within Yunnan Province and other provinces in China.
"Moving ahead, we will continue to devolve resources towards expanding and developing our tea and other food products business whilst strengthening the Group's position in the industry. We will also explore other business opportunities which would benefit the Group's overall development. Despite the challenging economic and competitive business environment in China, we remain cautiously optimistic about the outlook for 2011 and beyond," Dr. Chiu concluded.
Contact:
Strategic Financial Relations Limited
Heidi So
+852 2864 4826
heidi.so@sprg.com.hk
Maggie Au
+852 2864 4815
maggie.au@sprg.com.hk
Coco Wong
+852 2114 4951
coco.wong@sprg.com.hk
Fax: +852 2804 2789 / 2527 1196
http://www.sprg.com.hk
Topic: Earnings
Source: Longrun Tea Group
Sectors: Retail & eCommerce, Daily Finance
https://www.acnnewswire.com
From the Asia Corporate News Network
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