Interim Report 2012 - TodayIR.com

Management Discussion and AnalysisUnder the impact of the economic situation, the development of China’s commercial property industry in 2012 has been encounteringdifficult challenges, and such will cause delay of the leasors’ project progress and handover time of some of the Company’s new sites onwhich we have entered into lease contract or letter of intent. Moreover, in the second half of 2012, the management will adopt moreprudent measures to monitor the schedule of opening new stores, which include requiring more developed ambiance before commencingbusiness of a new store. The above factors will lead to a decrease in the total number of new stores in 2012 as compared with thatestimated in the year earlier. On the other hand, the management will leverage on the economic cycles to seek for more favorable leasingterms for the new sites, so as to lower the rental costs, and to speed up the opening of stores in due course.The continuing implementation of a multi-brand strategy is critical to our sustainable expansion and growth. Our “Shanghai Xiao Nan Guo”brand caters to medium and high-end Chinese consumers, our “Maison De L’Hui” brand is a high-end brand focused on business clienteleand our “The Dining Room” brand will pursue opportunities in mass markets by offering a simplified menu to medium-end clients. All threebrands had a good performance in the first half of this year:• Revenue of Shanghai Xiao Nan Guo in the first half of this year was RMB614.0 million, representing an increase of 31.8% ascompared to the same period last year. Among these, the total number of 21 new stores opened in 2011 contributed revenueof RMB169.3 million, representing 26.1% of total revenue, and most of our net profit growth. Shanghai Xiao Nan Guo, ourexisting brand, continued its growth momentum, and became a major contributor of the Group’s revenue and the cornerstone ofdevelopment.• Revenue of Maison De L’Hui in the first half of this year was RMB23.4 million, with a significant increase of comparable restaurantssales by 46.1% and realization of profit. Having achieved such a success within a short period of two years as a newly establishedhigh-end catering and restaurant brand, Maison De L’Hui signified the effectiveness of the Group’s strategy and implementation ofits multi-brand strategy.• The new restaurant under “The Dining Room” brand opened in the reporting period in June 2012 generated a revenue of HK$2.35million, customer traffic of 21,400, a per capita spending of HK$110 and a daily table turnover rate of 6.6 times, and achieved profitwithin one month after commencement of business. The Group will capitalize on “The Dining Room” concept, a medium-end brand,to capture the mass market segment and be resilience to downward economic pressure. Its lower investment on fixed assets, smallerarea floor, flexible and simplified menu enable a faster replication ability and profitability. We intend to make appropriate adjustmentsand speed up the opening of more “The Dining Room” restaurants in Hong Kong and Mainland China.INTERIM REPORT 2012 5