ctf annual results presentation 2020/2021

2021/2022INTERIM RESULTS

PRESENTATION

Basic EPS Dividend per share

Same store sales

HK$0.36

32.2%

1H2021

HK$0.22Payout ratio

61.4%

79.8%

Revenue

Profit attributable to shareholders 2

1 Core operating profit = Aggregate of adjusted gross profit and other income, less selling and distribution costs and general and administrative expenses2 An unrealised gain on gold loans of HK$401 million (1H2021: a loss of HK$517 million) was recorded in 1H2022

1H2022 RESULTS HIGHLIGHTS

Core operating profit 1

HK$3,581 million

60.4%

HK$44,186 million

79.1%

HK$4,472 million

9.6%

Mainland China Hong Kong & Macau of China

HK$0.22

2

1 5,214 POS for the Group as at 30 September 20212 E-commerce and smart retail applications, such as CloudSales 365, Cloud Kiosk and Smart Tray included3 RSV = Retail Sales Value measured the sales at the ending price (VAT inclusive, if any) of products sold to customers in the POS network and other channels4 RSV YoY change measured at constant exchange rates

Retail expansion strategy

1H2022 OPERATIONAL HIGHLIGHTS

Continued POS Expansion 1

Differentiated products

624

4,722 CHOW TAI FOOK JEWELLERY POS in Mainland China

T MARK Diamond

of diamond products RSV

Mainland China

23.0% of diamond products RSV

Hong Kong & Macau of China

29.1%

Smart retail strategy

159.8%

Mainland China smart retail RSV 2,3

9.0%

Contribute to respective

RSV Retail sale volume

16.4%

4

E-commerce

4.9%

Smart retail applications

4.1%

CTF ‧ HUÁ Collection in the Mainland

of gold jewelleryand products RSV43.3% 35.6%

1H2021

3

FINANCIALREVIEW

1 Adjusted gross profit = Gross profit excluding the impact of the unrealised loss (gain) on gold loans

1H2022 INCOME STATEMENT HIGHLIGHTS

Adjusted gross profit margin

SG&A ratio

Core operating profit margin

1H2021

16.5%10.1%

1H2021

20.0%14.0%

1H2021

35.1%23.5%

Revenue

HK$44,186 million

Adjusted gross profit 1

HK$10,394 million

20.0%

SG&A

HK$6,192 million

25.7%

Core operating profit

HK$4,472 million

9.6%

Revenue YoY

79.1%

5

39.6% 39.3% 31.5%14.0% 12.8% 63.0%

60.4%

60.7%68.5%

86.0%

87.2% 81.7%24,754

29,703 29,533

24,673

44,186 79.1%

1H2018 1H2019 1H2020 1H2021 1H2022

Mainland China Hong Kong & Macau of China and other markets

REVENUE BREAKDOWN

6.7% 5.6% 6.4% 9.0% 6.8% 35.1%

62.0%64.8% 64.5%

60.9%

70.7% 107.5%31.3%

29.6% 29.1%

30.1%

22.6% 34.4%

24,127

29,309 29,319

24,435

43,746 79.0%

1H2018 1H2019 1H2020 1H2021 1H2022

Gem-set, Platinum and K-gold jewellery

Gold jewellery and products

Watches

YoY ChangeYoY Change

Revenue by reportable segment (HK$ m)Revenue by product (HK$ m)

(Excluding jewellery trading and service income from franchisees)

6

-75.5%

-52.5%

-31.0%

31.2%

110.4%

57.7%

-3.1%-11.2%

11.0% 12.2%

141.2%

42.8%

23.0%12.4%

SAME STORE SALES GROWTH (“SSSG”) –

MAJOR MARKETS


FY2021

3QTD(1 Oct–18 Nov 21)

1Q 4Q 1Q2Q 3Q 2Q

FY2022

7

1H2021 1H2022

SSSG SSS volume growth SSSG SSS volume growth

Mainland China -0.2% -15.4% 32.2% 24.2%

Hong Kong & Macau of China -65.7% -66.9% 79.8% 74.8%

-82.9%-64.5%

-50.7%

7.0%

163.7%

106.2%

27.2%

-65.7%

-37.0%

14.0%

62.8% 65.1%

15.4%

-34.5%-19.8%

6.7%12.7%

159.8%

65.5%

48.9%

27.9%

-6.6%

2.5% -5.2%

79.6%

2.7%

-8.0% -9.4%

Same Store ASP 1

(HK$)1H2021 1H2022

Gem-set jewellery 6,900 7,400

Gold jewellery and products 5,100 5,300

Same Store ASP 1

(HK$)1H2021 1H2022

Gem-set jewellery 13,400 13,900

Gold jewellery and products 5,800 6,300

1 Average selling price on 1H2022 same store basis, was rounded to the nearest hundred HK dollar and measured at constant exchange rates; Value-added tax (VAT) in Mainland China included

SSSG – MAJOR PRODUCTS

SSSG – Mainland China SSSG – Hong Kong & Macau of China



1Q 2Q 3Q 4Q 1Q 2Q

FY2021




1Q 2Q 3Q 4Q 1Q 2Q

FY2021


FY2022 FY2022

8

2,843

4,050 4,282

685

28 190

1H2020 1H2021 1H2022

Mainland China

Hong Kong & Macau of China and other markets

CORE OPERATING PROFIT AND

PROFITABILITY ANALYSIS

Core operating profit YoY 1H2021 1H2022

Mainland China 42.5% 5.7%

Hong Kong & Macau of China and other markets

-95.9% 570.7%

14.1%

19.1%

11.1%

18.4%

16.5%

12.7%

31.9%34.6%

23.2%

1H2020 1H2021 1H2022

7.4%0.8%

3.4%

21.8%

41.6%

23.1%

28.1% 38.1% 25.5%

1H2020 1H2021 1H2022

Core operating profit margin

Adjusted gross profit margin SG&A ratio

Core operating profit by reportable segment (HK$m) Profitability – Mainland China

Core operating profit marginAdjusted gross profit margin SG&A ratio

Profitability – Hong Kong & Macau of China and other markets

9

SG&A ANALYSIS (HK$M)

840 2.8%643 2.6% 788 1.8% 22.6%

287 1.0%214 0.9%

492 1.1% 130.6%271 0.9%

156 0.6%

287 0.7% 84.5%442 1.5%

502 2.0%

496 1.1% -1.2%

636

570

387 2.6%2.7 %

203 1.3% -10.8%

866 2.9%

792 3.2%

1,091 2.5% 37.9%

2,291 7.8%

1,961 7.9%

2,447 5.5% 24.8%

5,750

4,928

6,192 25.7%

1H2020 1H2021 1H2022

19.5% 20.0%

14.0%

%

%

YoY Change

As a % of revenue

Concessionaire fees

Rental expenses

Depreciation and amortisation(Right-of-use assets, “ROUA”)

Packaging materials

Staff costs and related expenses

Depreciation and amortisation(Property, plant and equipment)

Other SG&A

Advertising and promotion expenses

92

118

10

%

7.3% 6.6%

4.9%

SG&A – STAFF COSTS AND

RELATED EXPENSES (HK$M)

6.8% 6.6% 6.0% -6.8%

53.6%65.0% 56.7% -10.7%

39.6%

28.3% 37.3% 35.0%

719

489 502 2.5%

1H2020 1H2021 1H2022

Variable staff costs

Fixed staff costs

Other staff related expenses

As a % of respective revenue

8.4%

16.0%

10.7%

3.3% 3.4% 2.9% 15.1%

60.6%54.7%

56.1% 37.2%

36.2%41.9%

41.0% 30.9%1,476

1,408

1,884 33.8%

1H2020 1H2021 1H2022

Variable staff costs

Fixed staff costs

Other staff related expenses

As a % of respective revenue

YoY ChangeYoY Change

1 Employees in production function excluded


1H2022 Average no. of employees 1

19,470-4.4% YoY

1H2022 Average no. of employees 1

2,810-10.2% YoY

11

4.2%4.4% 4.3%

8.7%8.2% 8.1%

19.3% 22.0% 22.0%

80.7% 78.0%

78.0%

1H2020 1H2021 1H2022

Concessionaire fees Lease-related expenses

SG&A – CONCESSIONAIRE FEES AND

LEASE – RELATED EXPENSES (HK$M)

6.2%

13.6%

5.6%

3.8% 3.4% 3.0%

89.2%

86.4%

64.7%

7.0%

10.2%

32.2%

561

440

279

1H2020 1H2021 1H2022

Rental expenses Depreciation and amortisation (ROUA) Finance costs on leases As a % of respective revenue

YoY Change

37.9%

-36.7%

YoY Change

1,0721,015

1,399

Lease-related expenses as a % of respective revenueConcessionaire fees as a % of respective revenue

37.8%

37.9%

12


INVENTORY AND

CAPITAL EXPENDITURE (HK$M)

Capex by function

Inventory turnover period by category 2 (day)

1H2021 FY2021 1H2022

Finished goods 370 234 231

Raw materials 108 78 72

Overall 478 312 303

39 2484

4831

67

322

262

400

35

35

57

444

352

608

1H2020 1H2021 1H2022

Projects

POS

Productions

Offices

Inventory balances by product 1

1 Packaging materials excluded2 Inventory turnover period = Closing inventory balances (excluding packaging materials) / cost of goods sold x 183 (for 1H figures) or 365 (For FY figures)

Watches

Gem-set, Platinum and K-gold jewellery Gold jewellery and products

13

1,642 3.8% 1,766 4.1% 1,670 3.0%

18,453 42.8% 17,394 40.6%

26,657 48.2%

23,051 53.4% 23,632 55.2%

26,949 48.8%

43,146 42,792

55,276

1H2021 FY2021 1H2022

1 Aggregate of bank borrowings, gold loans, net of cash and cash equivalents2 Bank balances and cash included

CAPITAL STRUCTURE HIGHLIGHTS

Hedging ratio

Net gearing ratio

As at 31 Mar 21

19.4%43.7%

As at 31 Mar 21

37.6%53.5%

Bank borrowings

HK$7,625 million

Gold loans

HK$13,639 million

Cash and cash equivalents 2

HK$6,855 million

Net debt 1

HK$14,408 million

HK$6,111 million

HK$5,725 million

HK$6,418 million HK$6,032 million

As at 31 Mar 21

As at 31 Mar 21

As at 31 Mar 21

As at 31 Mar 21

14

SUMMARY – MOVEMENTS INCASH FLOWS (HK$M)

6,032

5,421 5073,985

1,772 6081,204 2,477

3 6,855

FY2021(31 Mar 21)

1H2022(30 Sep 21)

Net cash used in inventories 2

Operating cash flows before movements in working capital

Net cash from other operating activities

Capital expenditure

Net increase in bank borrowings

Dividends paid

Bank balances and cash

Bank balances and cash

Pro forma free cash flows2,093

Leases paid 1

Other movements

1 With adoption of IFRS 16, leases paid was included in financing activities2 Net cash used in inventories included net change in inventories and repayment of gold loans

15

BUSINESSDEVELOPMENT

DUAL-FORCE STRATEGY

RETAIL EXPANSION STRATEGY

SMART RETAIL STRATEGY

Expand the business and get closer to customers

Digital empowerment and experience upgrade

Deploy “Dual Forces” to develop a jewellery ecosystem

17

BUSINESSDEVELOPMENT

- RETAIL EXPANSION

STRATEGY

POS movement by store brand 1

1H2021 FY2021 Addition Reduction Net 1H2022

CHOW TAI FOOK JEWELLERY 2

3,715 4,098 688 (64) 624 4,722

CTF WATCH 113 128 9 (4) 5 133

HEARTS ON FIRE 1 1 – – – 1

ENZO 65 75 11 (15) (4) 71

SOINLOVE 48 66 4 (8) (4) 62

MONOLOGUE 67 77 14 (10) 4 81

1 Shop-in-shop and counter-in-shop excluded2 CTF WATCH POS excluded

MAINLAND CHINA – RETAIL NETWORK

625 POS

Mainland China

19

41.6%

58.4%

30.5%

69.5%

44.9%

40.2%

14.9%16.1%

47.9%

19.0%

17.0%

40.2%

37.6%

22.2%12.0%

40.9%22.4%

24.7%

% of % of POS RSV

Tier I cities

Tier II cities

Tier III cities

Tier IV cities and others

% of % of POS RSV

Shopping mall

Department store

Others

RSV and POS by operation model RSV and POS by tier of cities

% of % of POS RSV

Self-operated

Franchised

RSV and POS by store format

RSV YoYNet POS

movement

Tier I cities 59.9% +79

Tier II cities 64.3% +219

Tier III cities 75.3% +132

Tier IV cities and others

71.5% +194

RSV YoYNet POS

movement

Self-operated 34.6% –

Franchised 100.9% +624

RSV YoYNet POS

movement

Shopping mall 77.7% +248

Department store

45.3% +114

Others 111.2% +262

MAINLAND CHINA –

CHOW TAI FOOK JEWELLERY POS

20

Retail network management

MAINLAND CHINA –

CHOW TAI FOOK JEWELLERY POS

Deepen our reach into Tier I and II

cities while penetrate into lower tier

and county level cities through

franchisees

Create new in-store ambience and

upgrade store image to offer optimal

customer experience

Net openings of 624 CHOW TAI FOOK

JEWELLERY POS in 1H2022

FY2022 net openings of CHOW TAI

FOOK JEWELLERY expected to be

~1,000

Beijing(北京市)

Guangzhou, Guangdong Province(廣東省廣州市) 21

MAINLAND CHINA –

PRODUCT DIFFERENTIATION

1 ASP = Average selling price

35.6%

1H2021

of gold jewellery and products RSV

ASP 1

43.3%

~HK$15,400

CTF ‧ HUÁ Collection

7.6%of diamond products RSV

8.5%

1H2021

19.2% YoY

RSV

23.0%

T MARK Diamond

of diamond products RSV

Guardian of Life Collection

Forever Young 88Collection

22

Hong Kong & Macau

of China

Other Markets

POS movement by store brand 1

1H2021 FY2021 Addition Reduction Net 1H2022

CHOW TAI FOOK JEWELLERY

132 134 2 (5) (3) 131

Hong Kong, China 79 79 1 (5) (4) 75

Macau, China 18 18 – – – 18

Other markets 35 37 1 – 1 38

HEARTS ON FIRE 9 8 2 (1) 1 9

SOINLOVE 1 1 – – – 1

MONOLOGUE 2 3 – – – 3

1 Shop-in-shop and counter-in-shop excluded

4 POS

HONG KONG & MACAU OF CHINA AND

OTHER MARKETS – RETAIL NETWORK

2 POS

23

66.5%

23.5%

10.0%

54.2%

12.5%

33.3%

% of % of POS RSV

Hong Kong, China

Macau, China

Other markets

RSV YoYNet POS

movement

Hong Kong, China 18.3% -4

Macau, China 502.9% –

Other markets 132.8% +2

Hong Kong & Macau of ChinaRSV settled by

China UnionPay, Alipay, WeChat Pay or RMB

28.9%(1H2021: 12.1%)

HONG KONG & MACAU OF CHINA AND

OTHER MARKETS

4 net closings in 1H2022, mainly in

touristic area

Continual review on POS network


Other markets

Retail network management

2 net openings in 1H2022

Focus on regions with higher domestic

demand

May continue the expansion strategy when

international travel resumes

RSV and POS by geography

24

BUSINESSDEVELOPMENT

- SMART RETAILSTRATEGY

MAINLAND CHINA – SMART RETAIL

RSV growth

159.8% YoY 16.4%

Contribution to respective retail sales volume

9.0%

Contribution to respective RSV ASP

HK$2,700 HK$1,900

1H2021

E-commerce

HK$1,900


HK$5,900

E-commerce

4.9%


4.1%

26

E-COMMERCE AND

SMART RETAIL APPLICATIONS

E-commerce

Joined various third-party marketplaces

such as Douyin and Pinduoduo

Launch hot selling and online exclusive

products to meet diverse customer needs

CloudSales 365

ASP

HK$5,300

~2.8XASP of e-commerce platforms in Mainland China

27

Milky Way Collection (left) and ING Collection (right)

D-ONE digital jewellery customisation platform

ASP

HK$22,000 ~3X Same Store ASP of gem-setjewellery in Mainland China

4.3% of diamond products RSV in Mainland China

SMART RETAIL APPLICATIONS

Cloud Kiosk

~47% POS in Mainland China

ASP

HK$6,500Covered

28

Contributed

CUSTOMER RELATIONSHIP MANAGEMENT

31.3%

3,460,000

Mainland China

Members as at 30 September 2021

Repeat purchase as a % of respective RSV in 1H2022

52.0%

1,260,000


Members as at 30 September 2021

Repeat purchase as a % of respective RSV in 1H2022

29

BUSINESSOUTLOOK &STRATEGIES

Outlook

Mainland China

• Expect business growth in 2H may decelerate due to a relatively high base

• Stay optimistic about the macro-economic development and the prospects of the jewellery industry


• Even if Hong Kong’s major border crossings re-open, we expect the number of tourists may not improve significantly in short-term

• Operation in Macau will depend on the development of the pandemic

Strategies

Mainland China

• Continue our retail expansion strategy leveraging franchise partners

• Utilise technology to create exceptional customer experience, optimise smart retail applications, and

keep abreast of customers' needs with the help of data


• Engage with customers by organising member exclusive events to satisfy local needs

• Improve operational efficiency and optimise business strategies

BUSINESS OUTLOOK AND STRATEGIES

31

APPENDIX

For the six months ended 30 September

(HK$m)1H2020 1H2021 1H2022

YoYChange

Revenue 29,533 24,673 44,186 +79.1%

Contribution of Gem-set, Platinum and K-gold jewellery 1

29.1% 30.1% 22.6% -7.5% pts

Gross profit 8,147 8,143 10,794 +32.6%

Gross profit margin 27.6% 33.0% 24.4% -8.6% pts

Adjusted gross profit margin 2 30.7% 35.1% 23.5% -11.6% pts

Selling and distribution costs and general and administrative expenses (“SG&A”)

5,750 4,928 6,192 +25.7%

SG&A to revenue ratio 19.5% 20.0% 14.0% -6.0% pts

Core operating profit 3,527 4,078 4,472 +9.6%

Core operating profit margin 11.9% 16.5% 10.1% -6.4% pts

Profit before taxation 2,200 3,284 4,809 +46.5%

Profit attributable to shareholders 1,533 2,232 3,581 +60.4%

Basic earnings per share HK$0.15 HK$0.22 HK$0.36 +60.4%

Dividend per share HK$0.12 HK$0.16 HK$0.22 N/A

1 Revenue from jewellery trading and service income from franchisees excluded2 Adjusted gross profit margin = Gross profit margin excluding the impact of the unrealised loss (gain) on gold loans

APPENDIX –

INCOME STATEMENT SUMMARY

33

APPENDIX – ILLUSTRATION OF

THE GOLD HEDGING MECHANISM

Base inventory

20,000 KG.

Seasonal, consigned

inventory & others

20,000 KG.

Base inventory

20,000 KG.

Seasonal, consigned

inventory & others

30,000 KG.

Period 0 Period 1(Peak season)

Gold inventory(Weight)

Hedging ratio:50%

Hedging ratio:60%

Note: Data provided are for illustrative purpose only

Gold product value at US$1,600/oz

Gold price decreaseto US$1,500/oz

Decreasing gold price to US$1,500/oz

US$(100)/oz

Gold loan contract at US$1,600/oz


Gain in gold loan contracts

Loss in sale of gold products

Gain in the settlement or

revaluationof gold loan contracts


Gold price decrease to US$1,500/oz

Decreasing gold price to US$1,500/oz

US$(100)/oz


OFFSET

US$100/oz

100% hedged

0% hedged

34

APPENDIX – ILLUSTRATION OF

THE UNREALISED GAIN ON GOLD LOANS

Note: Data provided are for illustrative purpose only

Hedged gold products


Gold price decrease to US$1,500/oz

Sale of gold products at market price

US$1,500/oz

Gold loan contract at US$1,600/oz

US$(100)/oz


Gain in gold loan contracts

Gain in the settlement or

revaluationof gold loan contracts

US$100/oz

Gold inventory value at US$1,600/oz

IF SOLD

IF NOT YET

SOLD Unrealised gain on gold loan contracts

US$100/oz

US$100/oz

Realised gain on gold loan contracts


35

These materials have been prepared by Chow Tai Fook Jewellery Group Limited (the “Company”) solely for use at this presentation and are not forpublic dissemination.

The slides and any other materials used in this presentation are the property of the Company and must be treated as such. The information contained inthis presentation is being furnished to you solely for your information and may not be forwarded, published or distributed, directly or indirectly, to anyother person (whether within or outside your organisation/firm), in whole or in part, for any purpose and may not be reproduced in any mannerwhatsoever. Any forwarding, publication, distribution or reproduction of this document in whole or in part is unauthorised.

The information contained in this presentation does not constitute or form part of any offer for sale or subscription of or solicitation or invitation of anyoffer to buy or subscribe for any securities or other interests of the Company or its holding Company or any of its subsidiaries in any jurisdiction or aninducement to enter into any investment activity, nor shall it or any part of it form the basis of or be relied on in connection with any contracts,commitment or investment decision whatsoever.

This presentation contains forward-looking statements. Such forward-looking statements are based on a number of assumptions about the operationsof the Company and other factors, many of which may be beyond the Company’s control. By their nature, forward-looking statements involve risks anduncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Accordingly, the Company’s actualresults may differ materially from those expressed or implied by such forward-looking statements. The Company has no obligation and does notundertake to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The informationcontained in this presentation has been compiled as of the date of this presentation, speaks as of the date of this presentation (or earlier, if so indicated)and will not be updated to reflect material developments which may occur after the date of this presentation, and is subject to change, includingsubstantial changes, without notice.

This presentation may include measures of financial performance which are not a measure of financial performance under IFRS, such as “Core operatingprofit”. These measures are presented because the Company believes they are useful measures to determine the Company’s operating cash flow andhistorical ability to meet debt service and capital expenditure requirements. “Core operating profit” should not be considered as an alternative to cashflows from operating activities, a measure of liquidity or an alternative to net profit or indicators of the Company’s operating performance on any othermeasure of performance derived in accordance with IFRS. Because it is not an IFRS measure, “Core operating profit” may not be comparable to similarlytitled measures presented by other companies.

The information contained in this presentation has not been independently verified. No representation, warranty, or undertaking express or implied, ismade as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of any information or opinion contained herein. It isnot the intention to provide, and you may not rely on this document as providing, a complete or comprehensive analysis of the Company’s financial ortrading position or prospects. None of the Company or any of its directors, officers, employees, agents, shareholders, affiliates, subsidiary, advisors orrepresentatives shall be in any way responsible for the contents hereof, or shall be liable (in negligence or otherwise) for any loss howsoever arising fromany use of this document or the information contained in this presentation or otherwise arising in connection therewith.

DISCLAIMER

36

ctf annual results presentation 2020/2021

Documents