China: China Resources Enterprise announced unaudited quarterly review for Q1 2007

China Resources Enterprise, Limited announced its unaudited quarterly financial and operational review for the three months ended 31 March 2007, in its press release, May 23.

For the period under review, the Group’s unaudited consolidated turnover and profit attributable to shareholders amounted to approximately HK$17,453 million and HK$740 million respectively, representing an increase of 14% and 10% over the same quarter of 2006. Excluding the after-tax effect of revaluation of investment properties, which amounted to gains of HK$243 million and HK$283 million in the first quarter of 2007 and 2006 respectively, underlying net profit for the first quarter of 2007 would have increased by 27%.

Retail business continued to show robust improvement in profitability with earnings increased by 32% to HK$168 million on a 28% rise in turnover. In particular, the supermarket operation registered a 29% profit growth to HK$130 million attributable to strong same store growth, stable gross margin and lower expense ratio. It recorded an overall same store growth in constant currency terms of 7.9% boosted by the 8.7% increase of the mainland supermarket business. EBITDA amounted to HK$319 million, up 18%. Other retail operations, including brand-fashion distribution and retail stores in Hong Kong, also performed well with profit growth of 109% and 7% respectively.

Beverage business maintained its rapid growth momentum with a 52% rise in turnover. Sales volume of beer increased by 43% to approximately 1,167,000 kiloliters, of which organic growth was 37%, lifting its leading share in the mainland market further. With a spectacular growth of 96% to approximately 824,000 kiloliters, “SNOW” consolidated its position as the single largest beer brand on the mainland. The first quarter of a year is typically a low season for the beverage business and there were initial losses in the new breweries during the period.

Despite a slightly higher net loss of HK$31 million compared to HK$29 million of the same period in 2006, strong sales volume growth and overall stable gross profit margin have paved solid platform for the peak beer sale seasons in the second and third quarters. Earnings of food business increased by 7% to HK$108 million with steady growth in profitability at the foodstuff distribution operation as well as the marine fishing and aquatic products processing operation. The “Ng Fung” brand of high quality fresh meat continued to be highly appreciated. Textile business delivered improved results. Earnings of the period amounted to HK$32 million, soared 78% with higher gross profit margin driven by product mix enhancement as a result of the technology upgrade program.

There was a 8% increase in turnover from the investment property business, which comprises retail investment properties predominantly. Petroleum business contributed HK$119 million earnings, a 49% increase over the same period of 2006. Steadily rising oil price, increase in sales volume, effective inventory management and turnaround in petrol station operation had contributed to the operating result. Managing Director of the Company, Mr. Mark Chen, said, “We have maintained our relatively fast development pace with matching recurring profit growth. With our strong financial position and rising market presence, we look forward to further growth led by our core businesses.” * * *

About China Resources Enterprise, Limited

China Resources Enterprise, Limited is listed on the Hong Kong Stock Exchange and is also traded on the London Stock Exchange. It is one of the constituent stocks of the Hang Seng Index in Hong Kong. The Group focuses on the consumer businesses in both the Chinese Mainland and Hong Kong, with core activities being retail, beverage, food processing and distribution, textile and property investment. For further information, please contact.

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