2010 Annual Results Presentation2010 Annual Results Presentation

March 2011March 2011

Disclaimer

The information contained in this presentation is intended solely for your personal reference. Such information is subject to change without notice, its accuracy is not guaranteed and it may j g , y g ynot contain all material information concerning Chow Sang Sang Holdings International Limited (the “Company”). The Company makes no representation regarding, and assumes no responsibility or liability for, the accuracy or completeness of, or any errors or omissions in, any information contained hereinany information contained herein.

In addition, the information contains projections and forward-looking statements that reflect the Company’s current views with respect to future events and financial performance. These views are based on current assumptions which are subject to various risks and which may changeare based on current assumptions which are subject to various risks and which may change over time. No assurance can be given that future events will occur, that projections will be achieved, or that the Company’s assumptions are correct. It is not the intention to provide, and you may not rely on this presentation as providing, a complete or comprehensive analysis of the Company's financial or trading position or prospects.

This presentation does not constitute an offer or invitation to purchase or subscribe for any securities or financial instruments or to provide any investment service or investment advice, p y ,and no part of it shall form the basis of or be relied upon in connection with any contract, commitment or investment decision in relation thereto.

2

Table of Contents

I. Company Overview

II. Business Review

III Financial HighlightsIII Financial Highlights

IV. Future Plans and Strategies

V. Appendix

3

Company OverviewCompany Overview

Company Overview

Chow Sang Sang GroupChow Sang Sang Group

Jewellery Retail and Manufacturing

Precious Metals Wholesale

Securities and Future Broking Other Investments

One of the largest t ith 254

Trading service of h i l t l

Boutique retail b k

Passive long-term i t t i l dioperators with 254

jewellery retail stores in Greater China under the “Chow Sang Sang" and

physical metalsHigh-volume, low-margin and minimal risk business operated on a

brokerage 8 offices in Hong Kong and Internet platformMinimal risk operated

investments including:► 4,953,500 HKEX

shares valued at approximately HK$826 million(1) andg g

“Emphasis Jewellery” brandsThe mainstay is gemset and gold jewellery

operated on a commission basisNo proprietary trading

Minimal risk operated on a commission basisNo proprietary trading

HK$826 million and annual dividend amounted to approximately HK$20million(2)

I t t tijewellery Sightholder of the Diamond Trading Company

► Investment properties valued at approximately HK$175 million(2)

5(1) As at March 22, 2011(2) As at December 31, 2010

Business ReviewBusiness Review

Focus on Strong Growth in Mainland China

Increasing No. of Stores in Mainland China

200

(No. of Stores)

150

New shops

+43

181

109 120143

50

100

New shops

+17

New shops

+29

0

50 17

2007 2008 2009 2010

39% 27% 14%Same-store

Sales Growth

23%

7

Extensive Nationwide Retail Network

Beijing Surrounding

Chow Sang Sang directly runs and controls all of its retail stores with no franchises

Heilongjiang

Surrounding Provinces

(24)

Beijing Flagship Store

Complementing the extensive retail network, the eshop.chowsangsang.com offers an online shopping service

Xinjiang

Inner Mongolia Jilin

Liaoning

Tianjin

Beijing

Shanghai Flagship Store

JiangsuHenan

Gansu Hebei

Shandong

Hubei

Shanxi

Anhui Shanghai

Eastern(35)Shaanxi

NingxiaQinghai

Tibet

Northern(52)

Shanghai Flagship Store

Chow Sang Sang

Empasis JewelleryGuangdong

Fujian

Sichuan

GuizhouJiangxi

Hunan

Hubei Anhui

Zhejiang

Shanghai

Taiwan

Chongqing

Kunming Flagship Store

Sang Sang Jewellery

China(1) 181(2) –

HK / Macau 40 11

Taiwan - 22

GuangdongYunnan Guangxi

Hong KongMacau

Hainan

Hong Kong Flagship Stores

8(1) Excluding Hong Kong and Macau(2) Reached 189 as of March 22, 2011

Taiwan 22 Covered cities Southern (1)

(70)

Fully Integrated Marketing Strategies

Pan Greater China marketing programmes with core focus on PRC customers► Increase marketing investment to outreach mainland tourists in HK & Macau.► China nationwide marketing roll out with well integrated programmes to further the reach of

customers in all tier marketsBrand enhancement Emphasis on international quality and designBrand enhancement – Emphasis on international, quality and design ► International collaboration to upgrade design quality & image ► Increase inventory on diamond, particularly on fine jewellery segment► Further upgrade shop design and service support. More flagship, star shops to provide pg p g pp g p p p

superior jewellery shopping experience

Building customer loyalty with effective push and pull programmes► Customized consumer events / programmes across all markets to draw new customers► Customized consumer events / programmes across all markets to draw new customers► Private VIP shows and events to build loyalty► Effective use of the 2.1M star shoppers data base to maintain consumer dialogue

Effective use of resources► Focus on core programmes► Effective planning with smart execution to maximize marketing dollars

9

► Building local marketing expertise to support regional centers

Financial HighlightsFinancial Highlights

Improving Operating Performance and Profitability …

Gross ProfitRevenue

(HK$ mm) (HK$ mm)11,70512,000

Drop in the wholesale segment;

Retail segment

grew at 11% 2,3022,500

25.0%

6,461

9,8809,463

8,000

10,000

1,213

1,887

1,561

19.7%

19.9%

2,00020.0%

5,089 4,853

6,000

,

6951,053

,

15.8%

1,000

1,500

10 0%

15.0%

5,2444,6104,791

2,000

4,000

866 8341,089500

,

5.0%

10.0%

02008 2009 2010

1H 2H

02008 2009 2010

0.0%

1H 2H Gross Margin

11

1H 2H 1H 2H Gross Margin

Improving Operating Performance and Profitability (Cont’d) …

Net Profit (1)Operating Profit

(HK$ mm) (HK$ mm)

9951,000 10.0%767800 8.0%

574

790

617

8.5%

8.3%

700

800

900

7.0%

8.0%

9.0%

464

588

482

6.6%

6.2%600 6.0%

7.0%

204

4756.2%

400

500

600

4 0%

5.0%

6.0%

177341

482

4.9%400

3 0%

4.0%

5.0%

413315

421200

300

400

2.0%

3.0%

4.0%

305247

303200

1.0%

2.0%

3.0%

0

100

2008 2009 20100.0%

1.0%

1H 2H Operating Margin

02008 2009 2010

0.0%

1.0%

1H 2H Net Profit Margin

12(1) Total group net profit

p g g

…Driven by Retail Segment…

Results Breakdown Revenue Breakdown

1.0% 0.5% 0.5%0.6%0.7% 0.9%

90%

100%

2.3%3.8% 1.8%

0.8% 0.9% 2.6%7.2%4.5% 4.7%

90%

100%

44.1%36.0%

28.3%

70%

80%

70%

80% Retail segment’s % contribution

pulled down by strong broking

70 6%40%

50%

60%

92.4% 88.1% 90.9%40%

50%

60%g gprofit

70.6%62.6%

54.2%

10%

20%

30%

10%

20%

30%

0%

10%

2008 2009 2010

R il Wh l l B ki O h

0%

10%

2008 2009 2010

R il Wh l l B ki O h

13

Retail Wholesale Broking Other Retail Wholesale Broking Other

…with High Growth …

Retail – Operating ResultsRetail – Revenue

(HK$ mm) (HK$ mm)8,2658,500 865

10 2% 10 5%

11.2%

800

900 12.0%

4,5605,358

5,923

5 500

6,500

7,500

488

662

545

10.2% 10.5%

600

700

800

8.0%

10.0%

2,8443,349

3,500

4,500

5,500

191 405

400

5006.0%

3,705

2,5742,5141,500

2,500

354257

377

100

200

300

2.0%

4.0%

-500

500

2008 2009 2010

0

100

2008 2009 20100.0%

1H 2H Margin

14

…and Robust Demand from PRC Consumers

2008 2010 2009

China

Others2.0%

Others1.3%

China33.4%

Others1.5%

China28.0%

China31.7%

HK/Macau38.2%HK/MacauHK/Macau

42 1%HK/Macau(PRC Customers)

21.7%

HK/Macau48.3%

(PRC Customers)27.1%

Sales Attrib table

42.1%HK/Macau

(PRC Customers)24.7%

Mainland customers’ contribution continues to increase

50% 56% 60%+6% +4%Attributable to PRC

Customers(1)

15(1) China sales + HK/Macau sales by PRC customers

Stable Working Capital Trends

Average Receivables Turnover Days Average Inventory Turnover Days

(No. of Days) (No. of Days)

101

130142

90

120

150

High gold price led to higher

8

1011

8

10

12

0

30

60

90 led to higher inventory days

0

2

4

6

8

Average Payables Turnover Days Cash Conversion Cycle

2008 2009 20100

2008 2009 2010

(No. of Days) (No. of Days)

56

6

8

10

105

135147

100

150

45

0

2

4

6

0

50

16

2008 2009 2010 2008 2009 2010

Financial Highlights

For the 12 months ended

or as at Dec 31, % Growth

(HK$ )(HK$ mm) 2008 2009 2010 08 vs 09 09 vs 10Turnover 9,880 9,463 11,705 (4.2%) 23.7%

Jewellery Retail 5,358 5,923 8,265 10.5% 39.5% Other businesses 4,522 3,540 3,440 (21.7%) (2.8%)

Gross profit 1,561 1,887 2,302 20.9% 22.0% Gross margin 15.8% 19.9% 19.7%

Operating profit 617 790 995 28.0% 25.9% Operating margin 6.2% 8.3% 8.5%

EBITDA 683 873 1,097 27.8% 25.7% Net income 482 588 767 22.1% 30.4%

Net margin 4.9% 6.2% 6.6% EPS (HK cents) 78.0 95.4 116.2 22.3% 21.8% Dividend per share (HK cents) 31.0 33.0 43.0 6.5% 30% Capital expenditure 104.2 135.4 109.1 29.9% (19.4%) Gearing ratio (1) 11.9% 15.0% 12.6%

17(1) Total borrowings to total shareholders’ equity including non-controlling interests. Total borrowings includes interest-bearing bank and other borrowings and

interest-bearing bank borrowings arising from securities and futures broking.

Future Plans and StrategiesFuture Plans and Strategies

Future Plans and Strategies

China Expansion Operating Efficiency

Plan to open ~50 new stores in Mainland China in 2011 Special attention on cities with relatively low number of stores

Acquired land in Shunde to expand production and reinforce the R&D center – from design development, manufacturing technologies to logistic yefficiency Beefing up the manpower of middle management Improve logistic efficiency with sub

t tcenters support

Emphasis placed on gem-set jewellery Launch national TV image campaign on

Product Mix and Branding Marketing Initiatives

p p g j ywith higher margins as distinct from pure gold itemsDifferentiate products, especially pure gold products, with innovative design

d b di d di ti ti

g p gChina TVs in 1HLeverage partnership with Antwerp Diamond Museum from Belgium Roll out regional VIP events to build

and branding and distinctive workmanship; increase presence of international brands in PRCOpening of new Flagship/Star Stores to raise brand awareness; upgrade shop

gcustomer loyaltyHigh investment on Mainland Tourist Campaign in Hong Kong

19

raise brand awareness; upgrade shop design and service supports

AppendixAppendix

Over 70 Years of Growth and Success…

1930-1970 1970-1980 1980-1990 1990-2000 2000-20101930 1970 1970 1980 1980 1990 1990 2000 2000 2010

1934 20051973 1998 201020092006

Chow Sang Sang

Goldsmith

Became sightholder of

Diamond

1973

First company in the industry

Re-entered the Mainland China market

Accelerated growth in

China

Opened the first

Flagship

Launch brand

revamp established

in Guangdong

Trading Company

the industry listed on

Hong Kong Stock

Exchange

g pStore in Beijing

pcampaign

Exchange

No. of St

9 254Stores

Turnover(HK$ mm)

130 11,705

21

Distinctive Brand Strategy

E h i J llCh S S

Chow Sang Sang Group carries two jewellery brands :

Emphasis JewelleryChow Sang Sang

Brand revamp in 2006: From a traditional goldsmith store to a contemporary and sophisticated jewellery

Creative jewellery platform for discerning customers whose focus is on distinctiveness and taste

brand

Affordable luxury: Positioned as the most desirable jewellery brand with international standing and quality at affordable price point

Operates via a small network of shops with its own brand management and product team in premier locations including new stores in Harbour City, Pacific Place and IFC malls in Hong Kongat affordable price point

Targets: Medium to high end markets

Place and IFC malls in Hong Kong

22

Unique Product Offerings

House Flagship Product Lines

Licensing for IP of Popular Characters

Platform for International Brands

Fine Jewellery Product Line

23

Strong Relationship with Renowned International Brands

Strong partnerships with 16 distinctive international jewellery brands from Europe and Japan Exclusive distribution rights for 10 of them including V&A and Regalo inand Japan. Exclusive distribution rights for 10 of them including V&A and Regalo in Greater China

Official agent of Rolex and Tudor in Hong Kong and Mainland China

24

Causeway Bay, HK

2010 New and Strategic Stores Set upCauseway Bay, HK

Xian, China

ifc, HK isquare, HK

Kunming, China Chongqing, China

25

Shijiazhuang, ChinaHangzhou, China Nanning, China

Integrated Marketing Strategies

Pan Greater China campaigns integrating product, marketing, promotions, down to consumer touch points to transpire an international aspirational brand

Special focus on fine jewellery marketing to appeal to the upper end of the high-net-worth consumers

points to transpire an international aspirational brand image

Customer Loyalty Programme Cultural, arts and government sponsorship to uplift the brand imageJade Exhibition Event

Central Store April 10, Hong Kong

Belgian EU Pavilion TLD Antwerp Diamond Launch May 10 , Shanghai

HK Philharmonic Orchestra2010, HK

April 10, Hong Kong

Scholarship for HK Academy for Performing Arts 2010, HK

HK SAR Government to take part in World Expo 2010, Shanghai

Mongolia Store Opening Aug 10

Rolex Store Opening Nov 10 , Chengdu

VIP DinnerNov 10 , Xian

26HK Repertory Theatre performance May ’10 HK& Guangzhou

Highly Recognized Brand Name

over awardsAttained in the past 6 years in areas of p y

Service, Management, Quality, Design & Branding

27

Investment Highlights

Leading Position to Enjoy Fast Growing

PRC Jewellery Market U i lf

1

2E perienced6 Market Unique self-operating

Business Model with Strong Brand

2Experienced and Dedicated Management

Team

6

Creative

Reputation

5 E t i3Creative Branding and

Marketing Strategies

5 Extensive Nationwide

Network with Innovative

3

Wide and Differentiated

Product Offerings

4Store Formats

28