Ajisen (China) Holdings Limited Announces 2008 Annual Results

Turnover surged 54.6% to HK$1.67 Billion

Profit from Core Operation surged 31.1% to HK$170 million

Restaurant Network Continued to Expand

HONG KONG, April 20 /PRNewswire-Asia/ --

Financial Highlights

Year ended 31 December 2008 2007 Change

(HK$’000) (HK$’000) (%)

(restated)

Turnover 1,673,072 1,081,970 +54.6%

Sales from restaurant operation 1,596,106 1,026,052 +55.6%

Profit attributable to equity

holders 220,841 231,572 -4.6%

Profit attributable to equity

holders (exclude other income

and other gains and losses) 170,368 129,921 +31.1%

Basic earning per share* (HK cent) 20.69 23.51 -12.0%

Dividend per share (HK cent) 9.45 5.85 +61.5%

Final dividend 5.25 5.85 --

Special dividend 4.20 Nil --

*The calculation of earnings per share for 2008 and 2007 are based on the

weighted average of approximately 1,067,582,714 shares and 985,187,570

shares respectively, owing to the issues of employee options and

acquisition of Shenzhen Weiqian

Ajisen (China) Holdings Limited ("Ajisen (China)" or the "Group"; Stock code: 538), one of the leading Fast Casual Restaurant ("FCR") chain operators in the PRC and Hong Kong, is pleased to announce its annual results for the year ended 31 December 2008.

During the year, the Group achieved satisfactory results amidst global financial crisis. For the year ended 31 December 2008, the Group’s turnover amounted to HK$1,673 million, up 54.6% from the previous year. The increase was mainly attributable to the expansion of the Group’s chain store network to a total of 315 restaurants, adding 105 restaurants as compared to the end of 2007. The gross profit of the Group recorded an increase of 53.6% amounting to HK$1,133 million, and the gross profit margin remained stable in a high level of 68% despite rising raw material price in 2008. During the year, the Group recorded a drop in its net profit due to significant decrease of 47.7% to HK$55 million in other income such as interest income and government subsidies. If excluded other income, other gain and losses, the earnings from the core operation jumped 31.1% to HK$170 million (FY2007: HK$129.9 million), evidencing that the restaurant operation of Group remained healthy. For the year ended 2008, the Group’s earning per share was HK20.69 cents (FY2007: HK23.51 cents), with cash and bank equivalence of HK$1,382.8million, showing the Group was in a strong cash position.

In view of the growth of the core operation and to reward shareholders, the Board has proposed to declare a final dividend of HK5.25 cents per share (FY2007: HK5.85 cents) and a special dividend of HK4.2 cents per share (FY2007: Nil) for the year ended 31 December 2008.

Commenting on the satisfactory annual results, Ms Daisy Poon, founder, Chairman and Chief Executive Officer of the Group, said, "Ajisen achieved significant top line growth and satisfactory growth of earnings from core operation amidst the challenging market environment. With the government stimulation on domestic consumption and rapid increase in people’s consumption level, there is a growing trend for selecting F&B enterprises with renowned brands, like Ajisen in the PRC. Furthermore, capitalizing on our strong brand advantage, versatile product variety and effective cost control, we are capable to walk through both peaks and troughs, and explore intrinsic potential of the Group."

During the year, the Group rapidly expanded the restaurant network, with strategic focus in Shanghai, Beijing, Hong Kong and Shenzhen. Currently, the restaurant network covered a total of 18 provinces and 59 cities nationwide. Moreover, the Group entered into four new provinces/municipalities, namely Henan, Hebei, Anhui and Tianjin, and 16 cities in 2008. The same-store sale growth of the Group’s PRC restaurant was 6.9%, while the Group’s HK restaurant recorded a negative same-store growth of 5.1% due to the negative impact of the global financial crisis. However, the Group’s HK restaurants have been in a mature stage and accounted for a relatively smaller proportion of the Group’s total revenue. The Group will strive to enhance the efficiency and is confident that HK operation will maintain a satisfactory same-store sale growth in the future.

In response to the increasing demand of its expanding FCR network, the Group has four new production facilities under construction. The Dongguan production base, occupying an area of 40,000 square meters ("sq.m."), and Phase I of the project has commenced operation at the end of 2008. Shanghai production base, occupying an area of 53,000 sq.m., is scheduled to commence operations at the end of 2009. The Chengdu and Tianjin production bases occupy an area of 58,000 sq.m. and 40,000 sq.m. respectively, are scheduled to commence operations in early 2010. Production equipments will be added to the production bases by stages and the operation progress will be adjusted according to the demand of the FCR network. Moreover, the Hong Kong processing centre, occupying an area of 2,700 sq.m., has commenced its operation at the beginning of 2009. It is expected to have a capacity to support approximately 70 restaurants. In addition, the Group had a total of 11 food processing and distribution centres during the reporting period, which could support approximately 380 restaurants.

During the year, the Group’s restaurant business contributed approximately HK$1,596,100,000, accounted for 95.4% of the Group’s total revenue. The revenue from the sale of packaged noodle and related products was approximately HK$77,000,000 (2007: HK$56,000,000), accounted for 4.6% of the Group’s total revenue. The Group has an extensive distribution network of over 6,000 points-of-sale for the packaged food products in China, of which approximately 600 were new additions during the year. The Group’s noodle products are manufactured solely by the Group and are sold through diversified channels, including restaurants, supermarkets as well as department stores including Wal-Mart, Carrefour, JUSCO, Wellcome etc. Two more supermarkets, namely NGS supermarket and Buddies together with two chain restaurant operators, namely Shanghai Yonghe King Co., Ltd and Shanghai Longshen Food & Drink Co., Ltd, were added to the Group’s customer list during the year. The Group was successful in enhancing the brand awareness riding on its extensive distribution network.

The Group further strengthened cost control of those major items such as raw material, labour, and rentals. In respect of the raw material, the price went down in the fourth quarter, however, the price in 2008 was still higher than that in 2007, and the falling rate was lower than the rising rate of the raw material. As such, the Group adopted the strategy to integrate and optimize the channels of suppliers and sources of product; review the supplier’s manufacturing cost; manage and control the cost of production and transportation, through which to relieve the pressure of rising consumption prices and reduce the costs significantly. Meanwhile, the Group adjusted up some prices in menu when new product series were launched in June, which partially offset the cost pressure caused by the increase of raw material prices.

The Group is committed to maximizing productivity while ensuring the consistency of the quality. During the year, the Group was successful in increasing the annual production yields of the major facilities by nearly 2%, and improved its the production efficiency as well as productivity. The overall production efficiency of the facilities in the PRC has increased season-on-season, this helped to offset the rise of manpower costs. In addition, in order to lower the overall manpower cost, the Group has developed a unified standard for recruiting restaurant staffs which reduced the number of management for each restaurant, streamlined the organizational structure and reduced the labour cost on new staff and these efforts have already been partially paid off. On the other hand, the percentage of rentals to the Group’s total revenue maintained at 14.1% due to the new stores selected by Group were mainly in economic format (approx. 200 to 250 sq.m. ) with the aim to achieve maximum efficiency per square meter. In addition, the Group has strengthened its cooperation with various large department stores and supermarkets in order to speed up the Group’s business expansion, and to enter into reasonable rental contracts through negotiation.

The Group has been paying high regard on food safety. During the year, the Group controlled its safety policy in a strict manner through three-ways’ effort by demanding supplier’s certificate, conducting self-inspection and applying for relevant authority’s inspection. The raw material suppliers are required to get the qualified certificate issued by provincial authoritative institutions. Meanwhile, the Group has established and implemented various food safety campaigns and procedures to ensure the food safety. The Group has also regularly conducted self-examination from factory to restaurant of the Group’s quality control departments. Furthermore, both Shanghai and Shenzhen factories have obtained the international qualifications. The Group also provides food products to the authoritative institutions regularly for inspection in order to comply with the relevant requirements.

With the rapid increase in people’s consumption level, there is a growing trend for selecting F&B enterprises with renowned brands. Moreover, the Government’s policies to boost domestic consumption will be implemented. It is believed that F&B sector would have bright prospects. The Group has established a renowned brand name across the nation, and enjoys high awareness and a strong reputation among consumers. Riding on the quality products developed by its dedicated and professional team, unique positioning and strong cash reserves, the Group will continue to expand its restaurant networks, expand its market share and penetration rate, enhance the quality of its products and brand, increase the productivity and profitability of its existing restaurants and further develop customer loyalty. The Group will also will further enhance its brand awareness and brand image by different marketing campaigns.

Ms. Poon concluded, "Looking ahead, the Group will strive to maintain its leading positing in the FCR sector, strengthen and optimize restaurant management system, implement strategic network expansion, and will add 90 new restaurants to a total of 405 restaurants by the end of 2009. Moreover, the Group will put greater effort to tighten cost control, and pursue for excellence in respect of development, operation and production to ensure the quality and maximum economic effectiveness for all newly open restaurants. The Group will continue to increase its efforts in staff training and marketing campaign, enhance operation standard and efficiency, uplift Ajisen’s brand awareness, and enhance our brand image to customers. Ajisen (China) is always committed to becoming the PRC’s No.1 FCR chain operator and, more importantly, to bringing higher returns to our shareholders."

Company Background

Ajisen (China) Holdings Limited is one of the leading Fast Casual Restaurant (“FCR”) chain operators in Hong Kong and the PRC. Since its establishment in 1996, Ajisen has been a fast-growing FCR chain operator selling Japanese ramen and Japanese-style dishes in the PRC and Hong Kong under the “Ajisen” brand. As at 31 December 2008, the Group’s nationwide network strategically covers the prime locations in the major PRC cities and Hong Kong, comprising 72 in Shanghai, 23 in Guangdong, 28 in Beijing, 159 in other regions in the PRC and 33 in Hong Kong. Moreover, it is supported by its own food manufacturing and processing centers located in Shanghai, Shenzhen, Beijing, Qingdao, Chengdu, Kunming, Guiyang and Hong Kong. The Group is accredited by the China Cuisine Association as one of the largest Japanese-style FCR chain operators in the PRC in terms of the number of chain restaurants. Ajisen’s mission is to become the No. 1 FCR chain operator in the PRC.

For further enquiries, please contact:

iPR Ogilvy Ltd.

Callis Lau/ Stephanie Yuen/ Rachel Poon/ Summer Si

Tel: +852-2136-6952/ +852-3170-6609/ +852-3170-6752 /+852-2136-6953

Fax: +852-3170-6606

Email: callis.lau@iprogilvy.com / stephanie.yuen@iprogilvy.com /

rachel.poon@iprogilvy.com /summer.si@iprogilvy.com