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Rents eat into profits

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RISING expenditures and weaker consumer spending in Hong Kong sent the annual net profit at City Chiu Chow (Holdings) this year down 15.9 per cent to $19.5 million from $23.2 million in 1994.

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The restaurant operator saw turnover rise about 12 per cent to $510.6 million from $455.8 million for the year to March 31, but higher rental costs and wages, and a downturn in the economy cut profit margins.

Earnings per share dropped to 10.6 cents from 13.8 cents in fiscal year 1994. The directors have recommended a final dividend, with a scrip option, of 2.68 cents per share.

'The group has been focusing its efforts on managing ever-increasing rental costs, and the recent purchase of a commercial property in Kwun Tong was a major step towards that strategy,' said chairman Cheng Hop-fai.

On the mainland, City Chiu Chow's operations suffered from China's tight monetary policy.

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Although the group's Guangzhou restaurant showed a profit for the year, its Shenzhen restaurant and its Harbour International Hotel in Huizhou suffered losses.

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