2006 Annual Results Announcement 24 April 2007 Financial - - PowerPoint PPT Presentation

24 April 2007

2006 Annual Results Announcement

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Financial Highlights

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Financial Highlights

For the years ended 31 December (HK$ million)

2006

2005 Change

Turnover 3,093.1

2,622.7 + 18%

Gross Profit 1,395.2

1,143.9 + 22%

Gross Profit Margin 45%

44% + 1%

Profit Attributable to Shareholders 291.6

254.6 + 15%

Net Profit Margin 9%

10%

• 1%

Basic and diluted EPS HK17.80 cents

HK15.72 cents + 13%

Total Dividend per Share

• Final Dividend

HK4.5 cents

HK2.5 cents HK5.0 cents HK2.5 cents

• HK0.5 cents

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Brand Business Continuously Gaining Weight

OEM Business

2004

2005

40% 60%

70% 30%

2006

Brand Business

75% 25%

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Turnover

Five-year Summary: Continual Ascension

• f Turnover, Profit & EPS

1,180.7 1,407.0 1,788.5 2,622.7 3,093.1

500 1,000 1,500 2,000 2,500 3,000 3,500 2002 2003 2004 2005 2006

HK$ million For the years ended 31 December

Profit

25.8 82.9 176.2 254.6 291.6

50 100 150 200 250 300 2002 2003 2004 2005 2006

HK$ million For the years ended 31 December

Basic EPS

1.73 5.51 11.33 15.72 17.80

5 10 15 20 2002 2003 2004 2005 2006

HK cent For the years ended 31 December

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Gross Profit Margin Analysis by Business

22% 24% 18% 54% 52% 50% 0% 10% 20% 30% 40% 50% 60% 2004 2005 2006

For the years ended 31 December

Brand Business OEM Business

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Operating Profit Margin Analysis by Business

9% 14% 9% 14% 11% 15% 0% 3% 6% 9% 12% 15% 18% 2004 2005 2006

For the years ended 31 December

Brand Business OEM Business

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Key Financial Figures

For the years ended 31 December (HK$ million)

2006

2005 Change

Cash & Cash Equivalents 148.7

146.5 + 2%

Shareholders’ Fund 981.3

744.2 + 32%

Bank Borrowings 183.2

133.1 + 38%

Debtors Turnover 13 days

17 days Decreased

Creditors Turnover 64 days

71 days Decreased

I nventory Turnover 147 days

156 days Decreased

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Business Review

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Turnover and profit reported at HK$776,776,000 and HK$69,851,000 respectively

(2005: HK$795,336,000 and HK$112,849,000)

To encounter global pressure from volatile oil prices and rising production costs, the Group strategically directed resources into supporting selected higher margin orders By strengthening relationship with key customers, the Group secured orders with higher margin and of higher volume US remained as the major overseas export market, accounting for 93% of the segment turnover As at 31 December 2006, the value of the export orders on hand exceeded HK$200 million

OEM Business

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Brand Business – Turnover Breakdown

For the year ended 31 December 2006

adidas Originals Business Shoebox Business

6% 8%

Daphne Business

86%

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Brand Business – Turnover and Profit / (Loss) Breakdown

For the year ended 31 December 2006 (HK$ million)

Daphne Shoebox adidas Originals Total 142.6 73.1 51% (4.6) (3% ) Turnover 1,979.9 193.8 2,316.3 Gross Profit 1,105.6 76.8 1,255.5 Gross Profit Margin 56% 40% 54% Operating Profit / (Loss) 326.8 8.0 330.2 Operating Profit Margin 17% 4% 14%

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Brand Business – Turnover Breakdown by Channels

For the year ended 31 December 2006 (HK$ ’000)

Daphne Shoebox adidas Originals Total 139,175

• 3,432

Stores 1,314,363 32,402 1,485,940 Counters 473,059 160,914 633,973 Others 192,452 513 196,397

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Brand Business – Ever-Expanding Sales Network

For the year ended 31 December 2006

Daphne Shoebox adidas Originals Total

164

• Stores

D18: 398 D28: 1,049

1,447 10 1,621 Counters

D18: 119 D28: 372

491 94 585

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Extensive Sales & Distribution Network of the Group

Brand Business – Distribution

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Northern China

Daphne Shoebox adidas Originals

187 14 – 124 – 21 Store Counter

Eastern China

Daphne Shoebox adidas Originals

470 61 6 137 – 30 Store Counter

Southern China

Daphne Shoebox adidas Originals

393 46 – 126 – 10 Store Counter

North Eastern China

Daphne Shoebox adidas Originals

239 30 2 70 – 16 Store Counter

Taiwan

Daphne

34 – Store Counter

West Central China

Daphne Shoebox adidas Originals

158 13 2 34 – 17 Store Counter

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Continuous Strong Growth

Excellent growth in turnover and profit Shifting overhead costs surge as a result of the booming Chinese economy partially to customers by raising the ASP Keep pace of point-of-sale network expansion with an additional 242 new points-of-sale for “D18” and 253 new points-of-sale for “D28” commencing business during the year Target to boost the network to reach 5,000 points-of-sale by 2010

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Diversified Portfolio as a Fashion Brand

Watches Handbags Eyewears

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Spokespersons

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Compelling Promotional Events

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Presence in Taiwan Market

Established brand presence in Taiwan with first Daphne store commencing business in April 2006 Fast-growing point-of-sale network with

• ver 30 stores opened in Taiwan as at 31

December 2006 With initial stage of investment coinciding with sluggish economy in Taiwan, the Group is working on reengineering the business there to boost its sales and profitability Ultimate goal – to convert “Daphne” into an international brand

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An Emerging Star

Segment turnover surged 90% to HK$142,607,000, in line with the points-of-sale network expansion from 75 shops to 164 The business is no longer making loss during the second half of the year. To even off the results for the whole year, slight operating loss was recorded at HK$4,590,000 (2005: loss of HK$2,751,000) Well-received by mass footwear market and poised to capture huge market potential The Group is confident that the business will be profitable in 2007, and had increased its stake by 36% to 95% to acquire bigger share of its future profit

20 20

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Set to be Advantageous by Beijing 2008 Olympic Games

Maintained steady network expansion, with total number of points-of-sale reaching 104 as at 31 December 2006 Product series of higher quality were introduced to China during the year with satisfactory market response Working closely with adidas in promoting the brand in China following the secure of the sponsorship contract for the Beijing 2008 Olympic Games Plan to accelerate point-of-sale network expansion to better capture opportunities brought by the approaching Beijing 2008 Olympic Games

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Logistics centres in Beijing and Shenyang have commenced initial operation Enhanced logistics management resulted in reduced inventory level in respective region, thus inventory turnover improved Plan to construct a logistics centre in Chengdu and expected to complete in 2007 To set up two new processing plants in Jiangxi and Taizhou to allow for taking on more processing tasks to lower manufacturing and

• perating costs, thereby improve profit margin

I nfrastructure Development

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Prospects

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Business Strategy

Strengthen tie with key customers to secure orders with higher margin and of higher volume Take on more processing tasks to lower manufacturing and operating costs, thereby improve profit margin Continue steady expansion of point-of-sale network Strive to promote brand awareness in Taiwan market Maintain marketing and promotion efforts to consolidate market leadership Diversify the product portfolio further when suitable opportunities arise Maintain fast expansion of point-of-sale network to maximize economies of scale and market coverage Expected to turn profitable in 2007 Accelerate expansion of the point-of-sale network Poised to capture opportunities brought by the Beijing 2008 Olympic Games

Daphne Daphne Shoebox Shoebox adidas adidas Originals Originals OEM OEM

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Q&A Session

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