The board of directors of China Resources Enterprise Ltd. announced that the group is expected to record an overall significant decrease in the consolidated profit and consolidated underlying profit (excluding the after-tax effect of asset revaluation and major disposals) for the three months ended 30 September 2014 and for the nine months ended 30 September 2014 as compared to that of the corresponding periods in 2013. The expected decrease in the consolidated profit and consolidated underlying profit (excluding the after-tax effect of asset revaluation and major disposals) of the Group is mainly attributable to the group's retail segment. The group's retail segment is expected to record: a decrease of approximately HKD 810 million in the consolidated underlying profit (excluding the after-tax effect of asset revaluation and major disposals) for the three months ended 30 September 2014 and a decrease of approximately HKD 990 million in the consolidated underlying profit (excluding the after-tax effect of asset revaluation and major disposals) for the nine months ended 30 September 2014.

The expected decrease in the consolidated profit and consolidated underlying net profit (excluding the after-tax effect of asset revaluation and major disposals) of the group's retail segment is mainly attributable to the financial impact arisen from the initial stage of the formation of the joint venture between the Group and Tesco PLC which was completed on 28 May 2014, and the stagnant growth in the Chinese retail market due to the continuation of the Chinese government's anti-extravagance policy and the increasing competition from the e-commerce businesses. It is expected that net loss will be recorded in the running-in period of the Joint Venture during which the group will incur additional time and costs for integrating the Tesco stores in China with other retail businesses of the group. The short-to-medium-term profitability of the group will also be affected by the consolidation of the losses from the Tesco stores in China.

These impacts have been reflected in the results of the group, particularly in the results for the three months ended 30 September 2014. Further details of the Joint Venture are set out in the Company's announcements dated 2 October 2013 and 29 May 2014 respectively and the Company's circular dated 25 February 2014.