Sun Art Retail : Financial Results Announcement for the Twelve Months Ended 31 March 2024

Stock code: 6808

Financial Results Announcement

For the twelve months ended 31 March 2024

Disclaimer

Potential investors, analysts and shareholders of Sun Art Retail Group Limited (the Company) and other recipients of this document are reminded that this document and any oral discussion made together with this document (the presentation) are provided for your information purposes only and you may not forward, publish, distribute, release or disseminate any part of the presentation directly or indirectly to any other person. This presentation should be read in conjunction with the Results Announcement and is qualified in its entirety by the more detailed information and financial information contained in the Results Announcement.

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Financial Results Announcement	- 2 -
For the twelve months ended 31 March 2024

Financial Highlights

For the twelve months ended 31 March

RMB in million	2022	2023	2024
Number of Stores	499	498	507
Revenue (1)	88,134	83,662	72,567
Same Store Sales Growth	-6.7%	-4.0%	-6.6%(2)
Gross Profit	21,473	20,581	17,958
Gross Profit Margin	24.4%	24.6%	24.7%
EBIT	18	1,177	-1,009
EBIT Margin	0.0%	1.4%	-1.4%
Profit for the period	-826	78	-1,668
Net Profit Margin	-0.9%	0.1%	-2.3%
Profit attributable to equity shareholders	-739	109	-1,605
Earnings per share	-0.08	0.01	-0.17
- Basic and diluted (RMB) (3)

Note: The Group has initially applied HKFRS 16 at 1 January 2019.

1. In our electronic appliance department, the business model was changed from self-operation to consignment from August 2018. Since then, only consignment fees received have been recognized in revenue instead of gross sales.
2. Same Store Sales Growth: for stores that have been open for more than twelve full months as of March 31, 2024. It is calculated by comparing the sales derived from those stores during their operating periods in the twelve months ended 31 March 2024 with sales during the corresponding periods ended 31 March 2023.Same Store Sales Growth is calculated based on sales excluding supply chain business (supply chain business includes Taocaicai and Tmall inventory sharing business).
3. The calculation of basic and diluted EPS is based on the weighted average number of 9,539,704,700 ordinary shares in issue during the period.

Financial Results Announcement	- 3 -
For the twelve months ended 31 March 2024

Store Expansion

Focusing on sustainable store expansion of multi-format in the regions with brand advantage.

600

500

400

300

200

100

0

		No. of stores									GFA (000'sqm)
								507			14,300
499	498				650
		3								13,786
9	12							13,642
		32		550	13,800		100	13,518
												98
																						134
										450	13,300								212
490	486			472		350	12,800		13,544	13,686
																13,172
										250
										12,300
										150	11,800
	FY2022		FY2023		FY2024	FY2022	FY2023				FY2024
		Membership Store			Superstore		Hypermarket						Membership Store			Superstore			Hypermarket
	New opening of	6 hypermarkets	New opening of 14 superstores	New opening of 3 membership stores
		Secured 4 hypermarket sites		Secured 13 superstore sites			Covering	207 cities

Financial Results Announcement	- 4 -
For the twelve months ended 31 March 2024

Total Revenue

Revenue decreased by 13.3% that traffic recovered partially offset the decline in ticket size. Rental income stabilized.

100,000

90,000

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0

RMB (million)

88,134

83,662

3,539

3,12772,567

3,120

84,59580,535

69,447

• Revenue of the Group amounted to RMB72,567 million, representing a year-on-year decrease of RMB11,095 million, or -13.3%.
• ◎ The contraction of supply chain business and store closures
• have approximately 8.4% impact on revenue.
• • Traffic was recovering, the decline in ticket size resulted in a decrease in sales.
• The rental income reached RMB3,120 million, basically remained
• consistent as compared to the same period of the last fiscal year.
• • Continued to adjust and optimize the tenant mix of galleries.
  • The vacancy rate declined and remained low.

FY2022	FY2023	FY2024
		Rental Income			Sales of Goods

Financial Results Announcement	- 5 -
For the twelve months ended 31 March 2024

Gross Profit Margin

The decrease in revenue from sales of goods resulted in a decrease in gross profit, and the gross profit margin was slightly higher than that of the same period of the last fiscal year.

26,500

24,500

22,500

20,500

18,500

16,500

14,500

12,500

RMB (million)

24.4%	24.6%	24.7%

21,473

20,581

17,958

26.0%

25.0%

24.0%

23.0%

22.0%

21.0%

20.0%

19.0%

18.0%

• Gross profit was RMB17,958 million, representing a year-on-year decrease of RMB2,623 million. The decrease in gross profit was
• mainly resulted from:
• ◎ A decrease in offline sales;
• ◎ Increased marketing investments and price subsidies to
• maintain price competitiveness.
• • Contraction of supply chain business.
• The gross profit margin was 24.7%, slightly higher than that of the same period of the last fiscal year.

FY2022		FY2023		FY2024
		Gross Profit		GP Margin

Financial Results Announcement	- 6 -
For the twelve months ended 31 March 2024

Expenses

Continued to reduce costs and increase efficiency. Without taking into account the impact of the impairment losses, expenses decreased by RMB1,414 million year-on-year.

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

RMB (million)

40.0%

26.0%	25.0%	28.2%	30.0%
22,904				20.0%
			20,879
2,551	20,429
2,369			10.0%
			2,251
						0.0%
20,353	18,510	18,178	-10.0%
						-20.0%
						-30.0%
	FY2022	FY2023		FY2024
		Administrative Expenses		Selling and marketing Expenses
		Total Opex as % of Revenue

Financial Results Announcement

For the twelve months ended 31 March 2024

• Expenses amounted to RMB20,429 million, representing
• a year-on-year decrease of RMB450 million, or -2.2%.
• Without taking into account the impact of the impairment losses, expenses amounted to RMB19,081 million, representing a year-on-year decrease of RMB1,414 million, or -6.9%.

- 7 -

EBIT

Without taking into account the impact of the impairment losses, EBIT decreased by RMB1,212 million year-on-year.

RMB (million)

1,500

1,177

2.5%

1,000

1.4%

1.5%

500		0.5%
	0.0%	339
0
	18	-1.4%
-500

-1,000

0.5%

-0.5%

-1.5%

• The operating loss was RMB1,009 million, representing a year-on-year decrease of RMB2,186 million.
• Without taking into account the impact of the impairment losses, the operating profit was RMB339 million, representing a year-on-year decrease of RMB1,222 million.

		(1,009)
-1,500		-2.5%
FY2022	FY2023		FY2024
EBIT excluding the impact of the impairment losses		EBIT
EBIT Margin excluding the impact of the impairment losses		EBIT Margin
Financial Results Announcement		- 8 -
For the twelve months ended 31 March 2024

Working Capital Days, CAPEX and Net Cash Position

Working capital was stable, net cash decreased due to an increase in restricted deposits and free cash flow was stable.

Working Capital Days(1)

CAPEX

Net Cash Position(2)

80

70

60

50

40

30

20

10

0

717072

53

52

53

FY2022

FY2023

FY2024

Inventory Turnover

Trade Payable Turnover

• Inventory turnover days and trade payable turnover days were 53 days and 72 days
• respectively. Working capital remained stable.

RMB (million)

1,911

1,600			1,254
1,400		1,123
1,200
1,000
800
600
400
200
0
FY2022	FY2023	FY2024

• CAPEX was RMB1,254 million. Continued to expand with multi-format.

25,000	RMB (million)
20,000	1,253	2,364	4,695
15,000
10,000	18,659	19,449	16,504
5,000
0
FY2022	FY2023		FY2024
	Restricted deposits		Net Cash

• Net cash position was RMB16,504 million, representing a year-on-year decrease of RMB2,945 million, mainly due to the increase in restricted deposits and decrease in operating profit.

Note:

1. The inventory turnover days and trade payable turnover days are calculated on average balances of inventory and trade payable, together with the cost of inventory during past twelve months.
2. The balance of net cash position is calculated as the sum of cash and cash equivalents, financial assets measured at FVPL, time deposits and the aforementioned portions in assets of disposal groups classified as held for sale minus maturity amount of bank loans..

Financial Results Announcement	- 9 -
For the twelve months ended 31 March 2024

Return to customer needs and the essence of retail

Return to the initial aspiration of the RT-Mart.

Build upon outstanding retail professionals and business operation model of the RT-mart, Understanding customers' needs and ensure their satisfaction.

"Sell more and more high-quality products to more and more customers at

lower and lower prices"

Financial Results Announcement	- 10 -
For the twelve months ended 31 March 2024