2005 Interim Results Announcement 2005 Interim Results - - PowerPoint PPT Presentation

Prime Success International Group Limited

永 恩 國 際 集 團 有 限 公 司

22 September 2005 22 September 2005 2005 Interim Results Announcement 2005 Interim Results Announcement

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Business Performance Business Performance

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Business Performance Business Performance

Satisfactory interim performance with turnover surged 38% to HK$1,154,576,000 Profit attributable to shareholders increased 61% to HK$106,334,000 OEM business decreased moderately and recorded a steady turnover of HK$361,718,000 Brand business turnover increased 70% to HK$792,858,000 Basic earnings per share: HK 6.74 cents, increased 58% compared to 2004 Interim dividend: HK 2.5 cents per share

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Business Performance Business Performance

Turnover Gross Profit Gross Profit Margin Profit Attributable to Shareholders Net Profit Margin Basic EPS

For the six months ended 30 June

2005 Change 2004 (Restated)

1,154,576,000 498,560,000 43 % 106,334,000 9 % HK 6.74 cents + 38 % + 63 % Improved + 61 % Improved + 58 % 839,572,000 305,745,000 36% 66,030,000 8% HK 4.26 cents

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2004

Turnover Breakdown by Business Turnover Breakdown by Business

For the six months ended 30 June

OEM Business

OEM Business

Brand Business

Brand Business

2005

69% 31%

55% 45%

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Turnover Breakdown by Market Turnover Breakdown by Market

The U.S.

The U.S.

China

China

2004

2005

For the six months ended 30 June

Others

Others 69% 30%

56% 43%

1% 1%

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Gross Profit Margin Analysis by Business Gross Profit Margin Analysis by Business

OEM Business Brand Business

19% 24% 52% 50% 0% 10% 20% 30% 40% 50% 60% 2004 2005

For the six months ended 30 June

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Net Profit Margin Analysis by Business Net Profit Margin Analysis by Business

OEM Business Brand Business

5% 12% 11% 13% 0% 2% 4% 6% 8% 10% 12% 14% 16% 2004 2005

For the six months ended 30 June

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Key Financial Figures Key Financial Figures

30 June 2005 Change Cash & Cash Equivalents Shareholders Fund Bank Borrowings Gearing Ratio Current Ratio Debtors’ Turnover Inventory Turnover 30 December 2004

(Restated)

+43% +18% +36% Increased Maintained Maintained Decreased 126,893,000 533,720,000 98,527,000 18.5% 1.60 times 13.7 days 155 days 181,394,000 628,623,000 134,423,000 21.4% 1.66 times 14.0 days 144 days

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Business Review Business Review

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OEM Business OEM Business

Turnover reached HK$361,718,000 (2004：HK$373,606,000) Share of total turnover of OEM business dropped to 31% (2004: 45%) due to relatively higher growth rate of turnover of the brand business As a result of continued increase in high margin orders and better cost control measures, the operating profit increased by 129% to HK$45,073,000 (2004: HK$19,690,000) Top five OEM customers accounted for 24% of the total turnover U.S. remained as the major oversea export market Business in Europe market maintained a steady growth. Turnover increased 22% compared to 2004 As at 30 June 2005, the export orders on hand worth more than HK$300,000,000

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Brand Business Brand Business

Turnover increased by 70 % to HK$792,858,000 (2004: HK$465,966,000) Operating profit increased by 45% to HK$87,690,000 (2004: HK$60,428,000)

For the six months ended 30 June

Shoebox Daphne Adidas – Original Collection

2005

88% 4%

Brand Business Turnover Breakdown

8%

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Turnover & Operating Profits by Brand Turnover & Operating Profits by Brand

Turnover Operating profits /(loss)

For the six months ended 30 June

Daphne Shoebox Adidas

31,477,000 (3,673,000)

Total

792,858,000 87,690,000 HK$ HK$ HK$ HK$ 695,418,000 87,398,000 65,963,000 3,965,000

Turnover and Profits / (Loss) Breakdown - Brand

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Sales by Square Footage Sales by Square Footage

Daphne Adidas-Original Collection Shoebox

HK$

134.54 251.87 40.64

Turnover Breakdown - Per Square Foot

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Own Own-

• Brand Business

Brand Business – –

Rising demand on consumer products and growing spending power of female customers have created a female footwear market laden with growth potential Opened more than 1,800 points-of-sales in the PRC, including

• ver 872 specialty shops and 312 “Daphne” counters. In addition,

there are 131 “Daphne” franchised specialty shops and over 400 points-of-sales that are set up by wholesalers in total. Operating profit surged approximately 45% to HK$ 87,398,000 (2004: HK$60,428,000)

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Own Own-

• Brand Business

Brand Business – –

Extensive sales & distribution network in the PRC Extensive sales & distribution network in the PRC

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Sub-brand of “Daphne” — “Daphne D28” targets working female customers with high spending power in the age group from 26 to 50 The Group currently has a total of 1,800 points-of-sales with 769 specialty shops and 311 counters

Own Own-

• Brand Business

Brand Business – –

131 franchised specialty shops and

• ver 400 points-of-sales that are

set up by wholesalers

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“Daphne D18”, a youth collection

• f “Daphne” targeting on customers

aged between 15 and 25 with strong spending power The Group has invited “S.H.E” to act as the spokesperson for “Daphne D18” since 2005. This move helped to arouse the brand awareness. A series of “S.H.E” branded limited editions were launched to enhance brand equity The Group operates 103 specialty shops and 1 counter at period end

Own Own-

• Brand Business

Brand Business – –

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Group launched a new brand “Shoebox” last year to further expand its customer portfolio and penetrate the mass market Some of the stores are located inside chain hypermarkets like “Carrefour”, “Trust Mart” and “Hymall” with high customer flow, hence broadened the Group’s income base Group has opened over 38 “Shoebox” mega stores in cities like Beijing, Shanghai, Wuhan, Yangzhou and Suzhou Due to the ever-rising demand for footwear products at reasonable prices in the PRC, the group will continue to expand the market coverage of “Shoebox” to those cities, in particular, the second and third tier cities in order to capture the flourishing business opportunities there

Own Own-

• Brand Business

Brand Business – –

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Own Own-

• Brand Business

Brand Business – –

Sales & distribution network in the PRC Sales & distribution network in the PRC

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Own Own-

• Brand Business

Brand Business – –

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Adidas Adidas – – Original Collection Original Collection

The Group stepped up expanding the “Adidas - Original Collection” business on its own in 2004 In addition to 8 new specialty shops, the number of “Adidas - Original Collection” counters was increased from 30 to 51 in major cities like Shanghai, Beijing and Guangzhou With higher income per capita and education level in major cities, people living there are increasingly inclined to healthy lifestyle and frequent exercises The coming 2008 Beijing Olympics will definitely boost the demand for athletic and casual footwear and apparel of prestigious brands

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Adidas Adidas – – Original Collection Original Collection

Sales & distribution network in the PRC Sales & distribution network in the PRC

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Adidas Adidas – – Original Collection Original Collection

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With the commencement of operation of the production plants in Anhui and Fujian and the processing plant in Jiangsu, the Group enjoyed greater production capacities to cater to the increasing new orders and market demand The logistics centers in Shanghai and Fujian have also commenced operation The constructions of the logistics centers in Shenyang and Beijing are expected to be completed in 2005 The constructions of the logistics centers in Chengdu and Guangdong are planned to be completed by the end of 2006. The Group is able to lower the costs

• f warehousing and transportation

and further enjoy economies of scale

Development of Infrastructure Development of Infrastructure

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Prospective Prospective

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Business Strategy Business Strategy

Increase Market Share Broaden Income Stream Keep Business Growth

Diversify brand business Strive to secure new OEM customers and

• rders with higher profit margin

Target on open up

• versea market

Introduce other new brands

• r consumer products

Speed up the financial and management reporting process

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Diversified Development of Brand Business Diversified Development of Brand Business

“Daphne” :

– The Group is preparing to invest in a film associated with the “Daphne” brand, which is expected to be released in 2006 – Target to open not less than 250 “Daphne” outlets each year

“Shoebox” :

– Further expand “Shoebox” sales network – Continue to expand the market coverage of “Shoebox” to those cities, in particular the second and third tier cities for larger customers’ base – Target to open a total of not less than 70 “Shoebox” stores in the year for wider sales network

“Adidas – Original Collection” :

– Open not less than 50 stores every year – Target to bring the total number to not less than 300 in 2008

The Group considers any good investment opportunity

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Q & A Q & A