2017 Annual Results
Presentation
Forward-Looking Statements
Certain statements contained in this presentation maybe viewed as forward-
looking statements. Such forward-looking statements represent the Company’s
expectations or beliefs concerning future events and involve known and unknown
risks and uncertainty that could cause actual results, performance or events to
differ materially from those expressed or implied in such statements.
Financial Review
Motor Business Review & Outlook
Consumer Products Review & Outlook
Key Initiatives
2017 Annual Results | Agenda
Financial Review | 2017 Annual Results
46,462 50,506
2016 2017
REVENUE (HK$’M) PROFIT ATTRIBUTABLE TO SHAREHOLDERS (HK$’M)
511
802
2016 2017
↑ 8.7% ↑ 56.9%
Financial Review | Revenue by Business Segment
67.4%
32.5%
0.1%
Motor Business Consumer Products Business Others
REVENUE BY BUSINESS SEGMENT
70.2%
29.7%
0.1%
2017 2016
Financial Review | Revenue by Market
61.2%
28.7%
10.1%
Mainland China Hong Kong and Macao Other Markets
REVENUE BY MARKET
63.2%
27.8%
9.0%
2017 2016
Financial Review | ROE & ROCE
HK$’M 1H2017 1H2016 %
Return on equity 4.9% [-]% pt
Return on capital employed 4.0% [-]% pt
2017 2016 2017 2016
8.5% 6.6% 5.7% 5.0%
Return on Equity Return on Capital Employed
For the year ended 31 December 2017
Financial Review | Earnings and Dividend
For the year ended 31 December 2017
2017 2016 %
Basic earnings per share (HK cents) 43.71 27.89 56.7%
Interim dividend per share (HK cents) 5.05 4.75 6.3%
Final dividend per share (HK cents) 11.90 3.69 222%
Total Dividend 16.95 8.44 101%
HK$ 2017 2016 %
Net asset value per share 5.80 5.05 14.9%
Financial Review | Financial Position
HK$’M 2017 2016
Non current assets 11,026 8,694
Current assets 16,225 16,721
Current liabilities 11,589 10,431
Non-current liabilities 4,950 5,740
Net assets 10,712 9,244
Non-controlling interests 567 512
Shareholders’ funds 10,145 8,732
HK$’M 2017 2016
Cash and bank deposits 1,138 1,160
Total debt 6,927 7,424
Net debt 5,789 6,264
Shareholders’ funds 10,145 8,732
Total capital 15,934 14,996
Net gearing ratio 36.3% 41.8 %
Financial Review | Net Gearing
Financial Review | Consolidated Cash Flow Statement
2017 2016 Change
Net cash generated from operating activities 2,005 2,234 (229)
Net cash used in investing activities (611) (1,999) 1,388
Net cash (used in)/from financing activities (1,391) 151 (1,542)
Dividend paid to shareholders of the Company (103) (204) 101
Net (decrease)/increase in cash and cash equivalents (100) 182 (282)
2017 Results | Agenda
Financial Review
Motor Business Review & Outlook
Consumer Products Review & Outlook
Key Initiatives
Consumer Products Business | Performance Highlights
SEGMENT REVENUE (HK$’M) SEGMENT RESULT FROM OPERATIONS (HK$’M)
4,794 4,711
7,235 8,810
1,802
2,887
2016 2017
Mainland China Hong Kong and Macao Other Markets
-89
-198
356 309
15
54
2016 2017Mainland China Hong Kong and Macao Other Markets
↑ 18.6% ↓ 41.5%
13,831
16,408 282
165
2016 2017
Consumer Products | Segment Revenue by Market
28.7%
53.7%
17.6%
Mainland China HK & Macao Other Markets
2017 SEGMENT REVENUE BY MARKET
34.7%
52.3%
13.0%
2017 2016
• IMSA China consolidation • Under-performance of key brands
• Stock-clearing discounts • Divest loss-making units • Infrastructure and resource integration
• Continue turnaround measures
• Review partnerships and M&A opportunities
Segment Result from Operations (HKD)
OPERATION REVIEW
OUTLOOK
-10.2% Segment Revenue (HKD)
+17.4% ↓
↓
(reduced losses)
Consumer Products Business | Mainland China Food and FMCG
• Earnings impacted by food trading and one-off costs incurred for manufacturing relocation
• After consolidation of IMSA business we combined into a very major Hong Kong and Macao distributor
OPERATION REVIEW
• Distribute more premium, healthy foods
• Expand into non-traditional channels
• Further develop the “Cheer” brand
• Enhance customer shopping experience
• Mobile payments
• Enhance efficiencies and synergies
• Extend product range
↓
+13.7% Segment Revenue (HKD)
Segment Result from Operations (HKD)
-14.1%
OUTLOOK
↓
Consumer Products Business | HK & Macao Food and FMCG
Consumer Products Business | HK & Macao Food and FMCG
FMCG Distribution
Consumer Products Business | HK & Macao Food and FMCG
Cheer brand development
Consumer Products Business | HK & Macao Food and FMCG
Food Retail
Consumer Products Business | HK & Macao Food and FMCG
Food manufacturing
Consumer Business Products | Other Markets Food and FMCG
Brunei
Japan
Thailand
Singapore
Malaysia
Philippines Indonesia
Myanmar
Japan
• Enhance operational efficiencies
• Focus on higher value categories
Result from Operations ↓
-100%
OUTLOOK
• New platform for growth in Southeast Asia from LF Asia acquisition
• Line expansion and facility upgrade in Malaysia manufacturing
↓
+38.7% Segment Revenue (HKD)
Segment Result from Operations (HKD)
-166.7% ↓
OPERATION REVIEW
• Solid performance in Greater China: • Steady performance in Hong Kong,
good growth in Macao but partly offset by supply constraints in mainland China
• Growth in Southeast Asia: • Operational investment • Expansion in Thailand and the
Philippines
• Expand into new categories and markets
• Invest in infrastructure in Hong Kong and Thailand
• Develop innovative Home-Health services
• Favourable market dynamics
OPERATION REVIEW OUTLOOK
+ ↓
+98.0% Segment Revenue (HKD)
↓ Segment Result from Operations (HKD)
+113.4%
Consumer Products Business | Healthcare Products Distribution
Consumer Products Business | Healthcare Products Distribution
Auriga Rebranding
• Solid performance in Greater China: • Steady performance in Hong Kong,
good growth in Macao but partly offset by supply constraints in mainland China
• Growth in Southeast Asia: • Operational investment • Expansion in Thailand and the
Philippines
• Expand into new categories and markets
• Invest in infrastructure in Hong Kong and Thailand
• Develop innovative Home-Health services
• Favourable market dynamics
OPERATION REVIEW OUTLOOK
+ ↓
+98.0% Segment Revenue (HKD)
↓ Segment Result from Operations (HKD)
+113.4%
Consumer Products Business | Healthcare Products Distribution
Consumer Products Business | Healthcare Products Distribution
DCH Auriga Health Centre
Consumer Products Business | Logistics Solutions
• Continue productivity enhancements and integration
• Commence operation of the Hengqin logistics centre in 2018
• Stable segment revenue
• Segment revenue increased due to restructuring and consolidation in mainland China
• Cost control initiatives underway: • Improve the infrastructure
utilisation • Develop cold chain capabilities • Leverage IMSA and intergroup
synergies
↓ -0.4% Segment Revenue (HKD)
↓ Segment Result from Operations (HKD)
+90.9%
OPERATION REVIEW
OUTLOOK
excluding one-offs
Consumer Products Business | Logistics Solutions
Hengqing Logistics Facilities
OUTLOOK
• Expand project development business
• Lifestyle electronics ↓
+2.4% Segment Revenue (HKD)
↓ Segment Result from Operations (HKD)
-59.6% • Increased warehousing costs • Unfavourable weather and competitive
discounting in seasonal products
• Healthy property market for project sales
• Successful launch of lifestyle audio products in China
OPERATION REVIEW
• Online-to-offline sales experience
Consumer Products Business | Electrical Products Distribution
Consumer Products Business | Electrical Products Distribution
Lifestyle Audio
Consumer Products Business | Electrical Products Distribution
Property development Projects
Consumer Products Business | Electrical Products Distribution
The Crossover by Gilman
2017 Results | Agenda
Financial Review
Motor Business Review & Outlook
Consumer Products Review & Outlook
Key Initiatives
Motor Business | Performance Highlights
24,555
26,219
5,664 5,684
2,379 2,170
2016 2017Mainland China HK & Macao Others
356
888
549
422
152
204
2016 2017Mainland China HK & Macao Others
1.4%
9.7%
6.4%
3.4%
7.4%
9.4%
Mainland China HK & Macao Others
20
16
20
16
20
17
20
17
↑ 43.2% ↑ 4.5%
SEGMENT REVENUE (HK$’M) SEGMENT RESULT FROM
OPERATIONS (HK$’M) SEGMENT MARGIN
20
16
32,598 34,073
1,057
1,514
20
17
↑2.0 pt
↓2.3 pt
↑3.0 pt
Motor Business | Revenue by Market
76.9%
16.7%
6.4%
Mainland China HK & Macao Other Markets
REVENUE BY MARKET
75.3%
17.4%
7.3%
2017 2016
Motor Business | Mainland China
• Revenue increased due to brand portfolio upgrades and acquisition of new dealerships in Zhejiang province
• Improved profitability from • Upgraded brand portfolio • Pricing management and Inventory
controls • Enhanced performance-based
incentives
• Motor-related business grew due to: • +33% in commission income from
motor financing • +44% finance leasing portfolio • Enhanced cross selling incentives
OPERATION REVIEW
Segment Result from Operations (HKD)
+6.8% Segment Revenue (HKD)
+149.4% ↓
↓
90.5%
9.5%
90.5%
9.5%
New car sales After-sales service
Motor Business | Mainland China
Motor Brands 4S Shops Showrooms
Audi 7 --
Bentley 7 --
Chevrolet 3 --
Ferrari / Maserati 3 --
Honda 11 4
Isuzu / Qingling 4 2
Lexus 8 1
Mercedes Benz 6 --
Nissan 3 --
SGM Buick 5 --
Toyota 21 7
Others 2 --
Total Dec 31, 2017 80 14
DEALERSHIPS SALES (RMB)
+8.3% New Cars Sales Revenue (RMB)
+7.5% After-sales service revenue (RMB)
After-sales serviced units
+5.5%, 1.1 million
2016 2017
Dealership Sales Share (RMB)
Motor Business | Mainland China
• Expand dealership network
• Grow the motor related business • Expand the used car business • Promote cross selling
• Optimize vehicle brand portfolio
OUTLOOK
Motor Business | Hong Kong and Macao
• Market distortion from an EV subsidy and new diesel regulations
• DCH unit sales +2.7% due to:
• Strong 2H model launches
• Macao replacement purchases
• Profitability declined against 2016 impacted by: • Discounting to secure
market share • Yen exchange rates
Segment Result from Operations (HKD)
OPERATION REVIEW
+0.4% Segment Revenue (HKD)
-23.1% ↓
↓
Motor Business | Hong Kong and Macao
ISUZU: Awarded for 38th Consecutive Year of Market Leadership
Motor Business | Hong Kong and Macao
• Market distortion from an EV subsidy and new diesel regulations
• DCH unit sales +2.7% due to:
• Strong 2H model launches
• Macao replacement purchases
• Profitability declined against 2016 impacted by: • Discounting to secure
market share • Yen exchange rates
Segment Result from Operations (HKD)
OPERATION REVIEW
+0.4% Segment Revenue (HKD)
-23.1% ↓
↓
Motor Business | Hong Kong and Macao
• Improve customer relationship management
• Secure commercial vehicle market share
• Build the motor related business
• Build online to offline connectivity
OUTLOOK
• Enhance aftersales and maintenance services
Motor Business | Hong Kong and Macao
2018 Model Launches
New / Facelift model
Honda
Nissan
Audi
Infiniti
Bentley Continental GT
Stepwgn Jazz
GTR and LEAF eNV200 EV
QX30
A8 A7
QX50
A6
CR-V
Motor Business | Other markets
• Vehicle range extension at Taiwan assembly plant
• Focus on launch of new Euro VI models in Singapore
OPERATION REVIEW
OUTLOOK
Segment Result from Operations (HKD)
• Taiwan revenue decreased due to Audi dealership market exit
• Singapore revenue decreased due to:
• Expiration diesel replacement incentives
• Slowdown in construction
• Segment result improved after Audi
dealership exit
-8.8% Segment Revenue (HKD)
+34.2% ↓
↓
2017 Results | Agenda
Financial Review
Motor Business Review & Outlook
Consumer Products Review & Outlook
Key Initiatives
Key Initiatives | Strategic growth
Improve Operational Efficiency
Invest in Growth
Build a Performance Culture
POSITIONED FOR STRATEGIC GROWTH
THANK YOU
Appendix | Management Team
Mr. Jijing ZHANG
Chairman & Non-executive Director • Holds various management position in CITIC Pacific, CITIC Mining International, CITIC Pacific China, CITIC Group, CITIC Securities
Company Limited, China CITIC Bank corporation Limited, CITIC Resources Holdings Limited, CITIC Limited respectively
Mr. Frank LAI
CEO & Executive Director • Former executive director, CFO & company secretary of China Resources Beer
• Former executive director, non-executive director, CFO and company secretary of China Resources Microelectronics Limited; CFO of Eagle Brand Holdings Limited
• Former executive director & CFO of Logic International Holdings Limited (now known as China Resources Gas Group Limited)
• Holds a Bachelor of Commerce degree from the University of Western Australia and a graduate diploma in Business and Administration from the Curtin University of Technology of Western Australia. He is a member of the Hong Kong Institute of Certified Public Accountants and a fellow member of CPA Australia
Ms. Kitty Fung
CFO & Executive Director • Over 25 years of hands-on and diversified working experience in renowned MNCs and well known local organizations across consumer
products/ fast moving consumer goods, manufacturing, publishing, banking and retails industries in the United States, Greater China and Asia Pacific regions
• Holds a Master of Business Administration and is a certified public accountant of the Hong Kong Institute of Certified Management Accountant and certified management accountant in the United States. She is also a chartered financial analyst of the CFA Institute.
Mr. Wu Ying Ha
CCO & Corporate Director • Over 21 years experience in corporate management, especially in human resources and administration.
• Former vice president of CITIC Resources Holdings Limited, being responsible for human resources and administrative management of CITIC Resources Group
• Former assistant general manager and general manager of Human Resources & Administration of CITIC United Asia Investments Limited
• Former manager of General Manager Office and assistant general manager of International Tour Department of China Travel Service (Holdings) Hong Kong Limited
• Holds a Master´s degree in Business Administration from Southeastern University, Washington, D.C.
Appendix | Management Team
Mr. Victor Lau
Head of Motor Group & Executive Director • Joined the Group in February 1973 and was appointed as a Director of Dah Chong Hong in January 2003.
• Over 30 years experience in the motor vehicle businesses of Hong Kong and the PRC
• Manages both commercial vehicles and passenger cars
• Champions the Isuzu distributorship business in the PRC, Hong Kong, Taiwan and Macao for the Group.
Mr. Alex Lee
Deputy Head of Motor Group & Executive Director • Joined the Group in June 1999 and appointed as Executive Director of DCH with effect from 1 March 2017.
• Obtained a Bachelor of Engineering (Mechanical Engineering) degree from the Hong Kong Polytechnic University and received a Master in Business Administration degree from the Chinese University of Hong Kong.
• A member of The Hong Kong Institute of Engineers. He has more than 20 years experience in the motor industry.
Ms. Betty Leung Head of Hong Kong Food Business & Corporate Director • Manages food commodity trading, food manufacturing and processing, food retailing and food agency distribution.
• Over 30 years sales and marketing experience in sales, marketing, advertising and buying across different parts of the supply chain including manufacturing, distribution and retailing in the consumer product industry.
• The Chairlady of the Hong Kong Suppliers Association
Mr. Timothy Collins
Chief Executive Officer, DCH Auriga • Over 25 years experience in the FMCG industry. From 1991 to 2003, he held multiple roles across Australia and Asia for Cadbury
Schweppes.
• Manages healthcare products business and focuses on guiding DCH Auriga (formerly known as LF Asia) into a new era of growth
• Joined LF Asia in 2004 and became CEO in 2015. He has been essential to the company's development, leading the expansion of market coverage across Asia and orchestrating the sale of LF Asia to DCH in 2016.