20 June 2019

For the year ended 31 March 2019

Annual Results

0

Press Conference

Agenda

2Group’s Financial Performance

6Business Review

13Outlook & Future Plans

1

Group’s Financial

Performance

2

FY2018/19 Annual Results Performance Highlights

Turnover

EBITDA 2.5% to HK$674.7M

Profit for the year 1.5 % to HK$472.1M

Gross profit 1.3% to HK$3,417.8M

Basic EPS(Including discontinued operation)

5.2%

Gross profit margin 1.3 p.p. to 40.8%

Net profit margin 0.2 p.p.

Return on equity(Including discontinued operation)

1.2 p.p.

to 15.4HK cents

#

Profit for the year(Including discontinued operation)

to HK$470.8M7.0 %

to 5.6%

^The final dividends will be payable in cash, with a scrip dividend alternative. To facilitate shareholders’ reinvestment of

their dividends into the Company’s shares, the Board has resolved to offer a 5% discount on the subscription price for

eligible shareholders who elect to receive the dividends in scrip#Earnings Before Interest, Taxes, Depreciation and Amortization

*Excluding the one-off special dividend of 3.0 HK cents per share in celebration of 40th anniversary of the Group last year

No. of Retail Outlets

2749 to

Interim dividend^ 100% 7.0HK cents

(per share)

Final dividend^ 18.2%* 9.0HK cents

(per share)

Total annual dividend per share 10.3%* 16.0HK cents

Dividend payout ratio ~ 105%Grand Plaza Sa Sa store

4.5 % to HK$8,375.9M

to 18.9%

3

Turnover

(HK$M)

% to Group

Turnover

HK & Macau 7,091.8 84.7% (LY:84.3%)

E-commerce 391.8 4.7% (LY:4.8%)

Malaysia 385.2 4.6% (LY:4.5%)

Mainland

China287.8 3.4% (LY:3.7%)

Singapore 219.3 2.6% (LY:2.7%)

Total 8,375.9 100.0%

Year ended 31 Mar 2019

Group Geographical Sales Mix

HK$8,375.9M 4.5%

Total Turnover(Continuing operations)

4

Year ended 31 Mar

(HK$M)2019 2018 YoY Change

- CAPEX (Excluding discontinued Taiwan operation)

131.6 166.1 -34.5

- Net cash generated from

operating activities346.2 748.2 -402.0

- Dividend for the year 495.1 531.3 -36.2

- Cash and bank balance 1,140.6 1,365.4 -224.8

Group Financial Position Is Solid

5

Business Review

6

HK & Macau: Modest Sales Growth

Remarks: The above data includes the impact of Deferred Income Adjustment for VIP bonus points

+18.5%

-5.8%

+4.9%

1H 2H FY

Year ended 31 Mar 2019

YoY Change %

+15.8%

-7.3%

+3.0%

1H 2H FY

❑ Transaction volume, avg. ticket size and retail sales increased by 10.7%, 7.0% and 18.5% in 1H

◼ High growth of mainland tourists arrivals & new trendy products boosted volume of both mainland tourists and local customers

❑ Transaction volume , avg. ticket size and retail sales declined by 2.8%, 3.0% and 5.8% in 2H

◼ Sino-US trade war, RMB depreciation and weak stock and property markets impacted consumer sentiment

◼ High base effect: Q4 LY sales increased by 18.6% driven by new trendy products; 2H CY sales declined due to weak trendy

product performance

◼ Daigou activities curtailed by Central government in Q4

◼ Intensified competition from pharmacies

Year ended 31 Mar 2019 1H 2H FY

Total no. of transactions

(Million/ YoY change%)9.9/ +10.7% 9.9/ -2.8% 19.8/ +3.5%

Avg. ticket size (HK$/ YoY change %)

352/ +7.0% 354/ -3.0% 353/ +1.4%

Retail Sales Growth

Same Store Sales Growth

Year ended 31 Mar 2019

7

YoY Change %

94,318

116,695

211,012

92,445

116,184

208,629

1H 2H FY

FY 17/18 FY 18/19

119,729 132,738

252,467

117,535130,161

247,695

1H 2H FY

FY 17/18 FY 18/19

Mainland China: Fruit of Product Portfolio Enhancement Emerged in 2H

*Average no. of stores during the stated period

Remarks: The above data includes the impact of Deferred Income Adjustment for VIP bonus points.

5454+1

54

5553 54

1H 2H

1H 2H FY

-1

Average Number of Stores*

FY18/19

FY17/18

Retail Sales

Year ended 31 Mar

(in RMB ‘000) (in RMB ‘000)

-0.4%

YoY change YoY change

Same Store Sales

❑GP%, GP$ and store contribution all improved in 2H despite slightly negative same store sales

❑Better performance in 2H than 1H:

◼House brand issues gradually resolved in 2H through the reorganisation of sourcing team and adjustment to product

portfolio

◼Sales of house brand products picked up from Q3

◼Retail sales and same store sales picked up in Q4

New warehouse in Wuhan sped up delivery in Central and Western China, increased the overall operational efficiency

❑A total of 16 shops currently operate in 8 Mainland cities in the Greater Bay Area

◼5 newly opened stores in FY1819 are located in Dongguan, Jiangmen, Zhuhai and Huizhou respectively

FY

8

Year ended 31 Mar

(RMB ‘000) 2019 2018 2017 YoY Change

- Retail sales 247,695 252,467 240,436 -4,772

- Recurring losses -13,478 -11,059 -16,794 -2,419

- Non-recurring costs &

provisions-342 2,112 3,847 -2,454

- Total operating loss -13,820 -8,947 -12,947 -4,873

Remarks: The above data includes the impact of Deferred Income Adjustment for VIP bonus points.

❑House brand sales improved in 2H, driving FY GP% to rebound

❑2H losses contracted, but not enough to bring about full year improvement against LY

9

Mainland China: Fruit of Product Portfolio Enhancement Emerged in 2H

Remarks: The above data includes the impact of Deferred Income Adjustment for VIP bonus points.

E-commerce: Third Party Platforms Have Been Major Growth Driver

❑ Third party platforms have been the main sales growth driver, accounting for near 60% of total sales

❑ Own website and mobile app took a back seat while focusing on constructing new e-commerce engine and order management system

❑ Recurrent and total losses both reduced

❑ Gradually phased in cross-border e-commerce mailing channels

◼Substantial savings on goods detention at Customs

◼Shortened delivery time

◼Logistic costs decreased from 15.3% to 10.9% of sales

Year ended 31 Mar (HK$M)

1HYoY Change

2HYoY Change

FYYoY Change

2019 2018 2019 2018 2019 2018

- Turnover 185.3 177.1 +4.6% 206.5 206.2 +0.2% 391.8 383.3 +2.2%

- in Mainland

China170.6 148.9 +14.6% 196.7 183.2 +7.4% 367.3 332.0 +10.6%

- Recurring losses -12.8 -16.8 +4.0 -12.0 -12.7 +0.7 -24.8 -29.6 +4.8

- Non-recurring

costs & provisions-4.2 0.5 -4.7 2.5 0.8 +1.7 -1.7 1.3 -3.0

- Total operating

loss-17.0 -16.3 -0.7 -9.5 -12.0 +2.6 -26.5 -28.3 +1.8

10

86,810 94,595

181,405

89,663 92,969

182,632

1H 2H FY

FY17/18 FY18/19

92,920 99,109

192,030

99,499 101,682

201,180

1H 2H FY

FY17/18 FY18/19

Malaysia: Increasing Penetration of Malay Market

Remarks: The above data includes the impact of Deferred Income Adjustment for VIP bonus points

*Average no. of stores during the stated period

Average Number of Stores* Retail Sales Same Store Sales

7975+3

Year ended 31 Mar

❑ Actions to attract Malay customers, increasing sales mix

◼ Changes to customer loyalty programme

▪ Targeted campaigns

▪ Launching suited make-up products

(in RM ‘000) (in RM ‘000)

77+5FY18/19

YoY change YoY change

7472 73FY17/18

1H 2H FY

1H 2H FY

+4

11

Singapore: Enhanced Store Network and Products

Remarks: The above data includes the impact of Deferred Income Adjustment for VIP bonus points

* Average no. of stores during the stated period

❑ Same store sales declined due to the weaker local economy in 2H

❑Will launch “Click-and-collect” service to drive sales

Retail Sales Same Store Sales

(in SGD ‘000) (in SGD ‘000)

-0.2%

YoY change YoY change

Year ended 31 Mar

2121+1

21+2FY18/19

1920 20FY17/18

2H FY

1H 2H FY

1H

+1

Average Number of Stores*

17,340 19,236

36,576

18,307 19,767

38,075

1H 2H FY

FY17/18 FY18/19

14,031 14,592

28,622

14,273 14,291

28,564

1H 2H FY

FY17/18 FY18/19

12

Outlook And

Future Plans

13

Product Portfolio

Strategy

Balance product portfolio to

support stable and sustained

growth

Capitalise on

Development

in the Greater

Bay Area

Policies & infrastructure

development will improve

economy and consumer

sentiment

Embrace

Digital World

Use Big Data to understand

customers’ needs, formulate

better product strategies and

improve customer experience

and sales

HK & Macau: Sustainable Business Development Strategy

Provide

customer

centric and

seamless

customers

experience

14

2

3

1

Usage of big data to improve product portfolio

management

◼ Balance product portfolio

◼ Faster product launches

◼ Improve linked sales and enhance GP%

Enhance the sales effectiveness of sole-agent

products through the active expansion of wholesale

distribution channels

◼ Target greater market penetration and revenue

Continuous efforts in eliminating low productivity SKUs

◼ Dedicate more shelf space for new products

and products with high productivity

◼ Lower inventory costs

PRODUCT AND SALES

CHANNEL STRATEGIES

HK & Macau:

Balance Product Portfolio to Support Stable & Sustained Growth

HOUSE BRAND

OWN BRAND

SOLE-AGENT

PARALLEL IMPORT

LOCAL SUPPLIES

SALES GROWTH;

GP CONTRIBUTION

PRODUCT MIX;

GROSS PROFIT

MARGIN

15

The Greater Bay Area

World-class Tourism

Destination

HK & Macau:

Capitalise on Development Opportunities in the Greater Bay Area (GBA)

GBA Development Plan

Unveiled on 18 Feb 2019

◼ HK becomes international

tourism showcase and hub for

multi-destinations in the region

◼ Function as core to build GBA

branding with joint efforts to

attract global tourists

XRL & HZM bridge are only 2 of 36

infrastructure projects

HK population is 7m, GBA’s

population is 70+million

National Economic Research

Institute: In 2050, GBA population will

increase from current 5% to 10% of

China’s total population

GBA Potential

Opportunities in GBA Store Network Strategy

Opportunities & Management

Open stores in target areas to fill

gaps

◼ Based on evolving

demographics, changes in

visitor arrivals via different

entry points and competitive

landscape

◼ Manage rental costs and

improve competitiveness of

the store network

O2O Seamless Experience

Source: The Outline Development Plan of GBA

Organise physical network

and online operations to

provide customers with

seamless shopping

experience offline and online

16

HK & Macau:

Strive to Manage Changes to Provide Seamless Shopping Experience

Phase 1

◼ Completed integration of the existing

customer database from 3 business units

Next steps

◼ Upload transaction data

◼ Capture new customers

◼ Identify customers

◼ Organise different business units to serve

each unique customer

Increase customer loyalty and repeat purchases

Single centralised cloud

customer database

PRC stores

HK & Macau stores

E-commerce

Develop and Use Centralised

Customer Database

Adopt Technology to Improve

Customer Experience

New POS system

Increase store capacity to handle higher traffic

Shorten checkout time

Enable self checkout and other IoT experiences

Warehouse system

Enhance handling capacity and flexibility

Shorten delivery time

Optimise cost effectiveness

BIG DATA

Customer

Database

Integration

POS

IoT

Warehouse

System

17

HK &

Macau

Stores

HK Stores

Macau

Stores E-commerce

3rd Party

Platforms

Own

Channels

PRC

Stores

Central

Western Northern

Eastern

Southern

Mainland China’s Role to Provide Seamless Customer Experience -Serve Returning Mainland Customers of HK & Macau Stores

Work closely with local suppliers

Introduce more popular new products

to boost traffic

Recruit and train more talented

frontline staff

Improve commission system

Improve Product Offerings1

Continuously Optimise

Store Network

Open stores in areas with high strategic value

GBA is one of the key development regions

Improve Store Productivity

& Cost EffectivenessBrand-new CRM System

Foster repeat purchases

Target new members

Collect data for analysis

Preparing Sa Sa for the New Retail Era

18

2

3

4

Supported by big data analysis

Online/offline coordination

New engine and order management

system to be completed by 2H 19/20

Fully leverage the strength of current

and new platforms

Expand customer base and drive sales

E-commerce: Role in Seamless Customer Experience - Online Element

Laying a Solid Foundation

for Sa Sa’s Long-term Development

E-commerce

Target to launch in FY19/20

Enable identification of customers

Facilitate New Retail operations

Launch WeChat

mini-programme2

Further Develop 3rd

Party Platforms1 New

E-commerce Engine3

Product Strategy4

Singapore & Malaysia Markets

Singapore Malaysia

Focus on product portfolio improvement, effectively introduce

popular new products

Improve store display

Enhance store productivity

Engage in attractive marketing activities

◼ Increase the exposure of Sa Sa and its product brands and

acquire new customers

Continue to attract both Malay and Chinese customers

◼ Plan to appoint Malays as brand or product

spokespersons

Launch new “Click-and-collect” service in FY19/20

Singapore & Malaysia

Markets

◼ Cater for the

growing trend of

online shopping

◼ Strengthen core

competitiveness

◼ Increase customer

loyalty & repeat

purchases

20

Store Network Strategy Varies between Markets

Hong Kong & Macau

Mainland China

Malaysia

Singapore

81

118

21

54

Total : 274 Points of sales*

*As of 31 March 2019

* Opened: Tourist stores: 6 ; Non-tourist stores: 9

** Closed: Tourist stores: 7; Non-tourist stores: 8

❑ Hong Kong & Macau: Increase profitability with

the consideration of opening new stores in tourists

areas in view of rental, districts and traffic

❑ Malaysia: Expansion mode (increase penetration)

❑ Mainland China and Singapore: Optimise the

store network

No. of Retail

Outlets

(Continuing

operations)

As of

31 Mar 18 Opened Closed

As of

31 Mar 19

HK & Macau 118 15* 15** 118

Mainland China 55 7 8 54

Singapore 20 5 4 21

Malaysia 72 10 1 81

Total 265 37 28 274

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