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GOME’s revenue up 7.9% YoY during the first 9 months of 2015

  • Offline Assets and Supply Chain Platform Sync Seamlessly with Online Platform
  • Proposed Acquisition of Non-Listed Retail Assets to Establish a Nationwide Total Retail Network
  • Sales Revenue: RMB48.173 billion, up 7.9% year-on-year
  • Sales Growth of Comparable Stores: up 2.3%; the Growth in the Second-tier Market: up 5.9%
  • E-Commerce Gross Merchandise Volume (including Gross Merchandise Volume of Marketplace): up 112.6% year-on-year; of which 43.7% from mobile terminals
  • Total number of stores increased to 1,224, covering 310 large and medium-sized cities

Hong Kong, 2015-12-1 — /EPR Retail News/ — GOME Electrical Appliances Holding Limited (HKSE: 493, “GOME” or “The Company”, together with its subsidiaries, “The Group”) today announced the Group’s operational update for the first three quarters of 2015 (“the reporting period”).

Outstanding Results under O2O Total Retail Strategy
During the Reporting Period, the Group continued to focus on further enhancing its consumer interface platforms with more interactive features and expanding its O2O Total Retail Ecosystem with the aim of attracting more customers and promoting sales growth. The Group continued to optimise its physical stores in first-tier market and accelerate the expansion of its store network in second-tier market. In addition, it promoted the market penetration of its e-commerce business nationwide.

During the Reporting Period, the Group opened 56 new stores and closed 49 underperforming stores in first-tier market. The Group opened 114 new stores and closed 29 stores in second-tier market. The total number of stores as at 30 September 2015 was 1,224, distributed across 310 large and medium-sized cities.

Accelerating Development under Total Retail O2O Strategy
GOME will continue to expand its O2O Total Retail Ecosystem and reinforce its nationwide O2O total retail experience. First of all, starting at the individual customer experience, GOME will improve on community-centric O2O, accelerate e-commerce growth and strengthen smart internet-tv terminals. Next, GOME will further develop its consumer interface platforms with more interactive features, riding on the strong synergy of mobile micro shops, smart stores, second-tier markets and GOME will complete the total retail value platform by strengthening its Big Data processing, procurement platform, logistics platform, after-sales platform, IT platform and financial platform. In doing so, GOME can improve the cooperation between the links in the O2O Total Retail Ecosystem, unleashing the unique competitive advantage of the Group’s “Open Omni-channel Retailer” strategy, and achieving the sustainable growth of its O2O Total Retail Ecosystem.

On 26 July 2015, GOME announced its proposed acquisition of the retail network and supply chain assets held by the controlling shareholder (“the Target Group”). The proposed acquisition would potentially achieve synergies in operations and corporate governance, completing the nationwide coverage of the online and offline assets, and its procurement, logistics, after-sales and supply chain platforms within the Total Retail Ecosystem. On 28 October 2015, GOME announced a supplemental agreement with its controlling shareholder in relation to the proposed acquisition of the Target Group. The total implied consideration for the transaction was reduced to HK$9,095 million – representing a discount of nearly 20% compared with the previously proposed consideration of HK$11,268 million – so as to enhance the attractiveness of the transaction to GOME’s shareholders.

If the acquisition is successful, the Target Group and the Listed Company together are expected to realise significant synergies, which are expected to enhance GOME’s overall profitability. Upon the completion of the acquisition, GOME will fully integrate listed and nonlisted offline resources, accelerate penetration into tier-2, tier-3 and tier-4 cities and to support the speedy nationwide coverage of E-Commerce. Through the acquisition, we will be able to upgrade and transform the current regional retail network of the Listed Company into a nationwide retail network and accelerate the implementation of the O2O Total Retail strategy. The synergies arising from the acquisition will lead to sales/market share growth, gross profit improvement and cash flow optimization, cost savings and enhanced corporate governance. Moreover, pursuant to the supplemental agreement and based on profit attributable to owners of the parent for the 6 months ended 30 June 2015, the combined pro forma net profit of the Group and the Target Group amounts to RMB943 million, resulting in an EPS accretion of approximately 3.6% (calculated according to the pro forma enlarged number of shares outstanding after the completion of the acquisition), as compared with 0.5% under the original terms of the acquisition, which further enhances returns for GOME’s shareholders.

“The acquisition of the controlling shareholder of retail assets can further enhance the competitiveness of GOME. It is critical for us to seize the market in the O2O new era,” said Mr. Wang Junzhou, CEO of GOME. “In future, with the ‘Internet +’ national policy, GOME will reinforce its strengths in retail network and supply chain assets, actively develop its online business, reap synergies online and offline, and accelerate implementation of its O2O Total Retail strategy. In doing so, GOME will be able to achieve industry-leading operating performance. We are confident of achieving the goal of ‘building another GOME’ by 2017.”

Notes: As a result of the Company’s announced acquisition of Artway and whitewash waiver application, the Company is currently under an offer period. As such, the announcement only provides an operational update for the first three quarters of 2015. Pursuant to the Code, the unaudited profit attributable to owners of the parent of the Company for the Reporting Period would constitute a profit forecast and will be required to be reported on by the Company’s financial advisers and reporting accountants under the Code if it was announced. There are practical difficulties in reporting on such unaudited financial information in accordance with the requirements of the Code within a short period of time and before the issue of this announcement. Hence, the Company will not disclose profit related information in our Q3 announcement.


About GOME Electrical Appliances Holding Limited
GOME Electrical Appliances Holding Limited has been listed on The Hong Kong Stock Exchange since July 2004 (HKSE: 00493). The GOME Group was founded in China in 1987 and is engaged in the retail business of electrical appliances and consumer electronics in China. It is the leading retail chain of electrical appliances and consumer electronics and the leading retail chain enterprise in China.

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