Artini China Co. Ltd. (Stock Code: 789) 2008/2009 Interim Results - - PowerPoint PPT Presentation

Artini China Co. Ltd.

(Stock Code: 789)

2008/2009 Interim Results Corporate Presentation

December 2008

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Disclaimer Disclaimer

This document does not constitute, or form part of any offer for subscription or sale of, or solicitation of any

• ffer to subscribe for or buy of any securities of Artini China Co. Ltd. ("the Company"), nor shall it be

construed as calculated to invite any such offer, nor shall this document or any part of it form the basis of, nor can it be relied upon in connection with, or act as an inducement to enter into any contract or commitment

• whatsoever. Accordingly, any decision in connection with the subscription or acquisition of securities of the

Company pursuant to or in connection with any offering must be made solely on the basis of the information to be contained in the prospectus or other offering circular that may be issued by the Company in connection with such offering. The information of the documents should not be relied upon as representation of the Company. FORWARD-LOOKING STATEMENTS This presentation contains certain forward-looking statements with respect to the financial condition, results of

• perations and business of the Company in the PRC, Hong Kong and Macao and certain of the plans and
• bjectives of the management of the Company. Such forward-looking statements involve known and unknown

risks, uncertainties and other factors which may cause the actual results or performance of the Company to be materially different from any future results or performance expressed or implied by such forward-looking

• statements. Such forward-looking statements were based on assumptions regarding the Company's present

and future business strategies and the political and economic environment in which the Company and its subsidiaries will operate in the future. Reliance should not be placed on these forward-looking statements, which reflect the view of the Company's management as of the date of this presentation only. There can be no assurance that future results or events will be consistent with any such forward-looking statements. CONFIDENTIALITY This document is given to you on a confidential basis and must not be passed to or transmitted to, or their contents be disclosed to, any other person and no copy shall be taken hereof.

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Financial Highlights Financial Highlights

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Open Forum Open Forum

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Business Review Business Review

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Future Strategies Future Strategies

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Content Content

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Financial Financial Highlights Highlights

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Financial Summary

+ 2.9% 155,703 160,157 Gross profit N/A 53,400 (10,237) (Loss)/Profit from operations N/A 51,652 (19,442) (Loss)/Profit for the period

• 14.2% pts

59.0 44.8 Gross profit margin (%) Change 2007 2008 For the six months ended 30 Sept (HK$ ’000) N/A 0.061 (0.021) Basic (loss)/earnings per share (HK$) 263,693 313,766 + 18.9% Turnover Major challenges in 1H2008/09 : Weakened consumer sentiment due to inflation, Sichuan earthquake and 2008 Beijing Olympic Game Global financial turmoil and credit crunch Rising labor and raw material costs Appreciation in RMB

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163.7 170.3 115.8 163.7 100 200 300 400

09/2007 09/2008

Turnover Turnover Analysis Analysis

Turnover Breakdown Turnover Analysis by Geographical Segments

HK$ mn

CDM Turnover Retail Turnover

5.7% 3.2% 1.8% 0.8% 17.3% 11.3% 39.5% 58.0% 15.7% 11.0% 20.0% 15.7%

0% 20% 40% 60% 80% 100% 01/2007 01/2008

As a % of turnover Europe America Hong Kong and Macao Africa China Other Asia-Pacific regions

Growth: 18.9%

For the six months ended 30 Sept For the six months ended 30 Sept

09/2007 09/2008 +41.4% +4.0%

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Expenses Breakdown and Analysis

82.2 142.2 17.4 20.0 0.3 12.3 0.0 50.0 100.0 150.0 200.0 09/2007 09/2008

HK$ mn

Expenses Analysis

Selling and Distribution Costs Administrative Expenses Other Operating Expenses

35.8% 10.8% 31.8% 21.6% Operating Lease Charges (Rent & Rate) Wage and Salaries and Relevant Staff Costs Other Expenses Advertising

Selling and Distribution Costs Breakdown 09/2008

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Operational Data Operational Data

Rental analysis Percentage of turnover (average) Average rent (HK$) As at 30 Sept 2008 Concessions Retail Stores 766,000 294,000 27.8% 28.6% Same-store sales growth Hong Kong and Macao PRC Mar – Sept 2007 vs Mar – Sept 2008

• 7.1%
• 25.6%
• 5.6%

181 75 106 As at 30 Sep 2008 +30 45 Change As at 31 March 2008 138 93 +43 +13 Total Network expansion

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Key Financial Data Key Financial Data

59,356 314,316 Cash in hand (HK$ ’000) As at 30 Sept 2008 As at 31 Mar 2008 Inventories (HK$ ’000)

• Raw material
• Work in Progress
• Finished Goods

30,859 16,985 41,580 13,758 14,416 28,317 Trade receivables turnover (Days) 45 30 Trade payables turnover (Days) 19 19 Current ratio (x) 7.50 1.4 Debt to equity (x) 0.007 1.1

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Capital Expenditure

For the six months ended 30 Sept

26,286 24,404 TOTAL 8,004 7,770 Head offices and regional offices 3,880 16,494 Leasehold renovation – Retail and concession stores, fixtures and fittings 14,402 1,140 Leasehold land and building plant and machinery 2008 2007 HK$ ’000 Capital Expenditures

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Business Business Review Review

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Retail Business: Retail Business: Marketing Initiatives Marketing Initiatives

Form strategic alliances with renowned corporations Launch new limited packaged accessory sets Bundle up rental agreement with favourable advertising packages

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Organize singing contest from Nov 2008 to Feb 2009 in 9 major cities in the PRC to promote brand to the younger generation

Retail Business: Brand Building Strategies

Promote the Group’s brands through fashion shows, sponsorships of entertainment events and TV drama series Place advertisement in leading fashion magazines

Strengthening Strengthening Corporate I mage Corporate I mage Brand Promotional Brand Promotional Campaign Campaign Enhancing Visibility Enhancing Visibility

Organized the “Express Care and Confronting the Disaster Hand-in-Hand” fund raising event after the Sichuan earthquake disaster Awarded as the “Best Brand Enterprise Award 2008” by Hong Kong Productivity Council

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Retail Business: Retail Business: Further Enhance Customer Loyalty Further Enhance Customer Loyalty

• No. of

VIPs

62,936 56,286 28,108

31 Mar 2007 3/2008 30 Sep 2008 31 Mar 2008

10,586 3,691 681

31 Mar 2007 31 Mar 2008 30 Sep 2008

Number of VIPs increased rapidly to 73,522 as at 30 September 2008

An increase of 155% from 28,789 during 31 March 2007 to 30 September 2008

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CDM Business

Continued to collaborate closely with branded customers to develop and design products concurrently Expanded customer base to include corporate clients for gifts and premium items Became the Licensed Enterprise of 2010 Guangzhou Asian Games, making and distributing licensed souvenir products Diversified portfolio of customers:

Victoria + Co., Ltd Lucas Design International Inc. Philippines Import/Export Ltd Connexions (Asia) Limited

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Future Future Strategies Strategies

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Corporate Mission Corporate Mission

Enhance brand awareness and promote customer loyalty

Broaden revenue base

To become one of the largest fashion accessories retail brand operators in the PRC

Expand customer base Implement stringent cost control

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Retail Business: Broaden Revenue Base

Expand retail network through distributors Further develop online shopping system Expand product range through obtaining exclusive distribution rights of famous brands Form strategic alliance with renowned corporations Increase brand awareness through the launch of concept stores Adjust network expansion plan

Plan to have shops launched by distributors which are mainly located in 2nd and 3rd tier cities Reduce operating cost through authorizing distributors Adjust the pace of network expansion base on market conditions Expect to reach 200 retail points in the PRC by March 2009 Expand presence in 2nd tier cities with high growth potential Design and develop accessories with renowned corporations Provide customers with wider range of products Leverage on the client base

• f renowned corporations

The first flagship store will be

• pened in Beijing Sanlitun

Village in Jan 2009 Obtained the exclusive distribution right of NBA timepiece products Products were launched in Dec 2008 and sold in Q’ggle stores Further enhance the online platform and provide greater

• nline-shopping experience

to customers

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CDM Business: Expand Customer Base

Seek new global CDM customers

• esp. PRC and Russia

Obtain new licenses

• f international

brands Become the licensed enterprise of 2010 Guangzhou Asian Games Develop new corporate clients for gift & premium items

CDM Business

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Implement Stringent Cost Control

Streamline corporate structure to reduce office expenditures Adopt tighter budget control for the forthcoming promotional expenses Evaluate the profitability of all retail points to adjust retail expansion plan

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Open Forum Open Forum

IR Contact: Artini China Co. Ltd. Email: jerry.lau@artini.com.hk/ bennieip@artini.com.cn Tel: +86 755 2583 8888 Media Relations Contact: Porda International (Finance) PR Group Email: harriet.lau@pordafinance.com.hk/ kylie.yeung@pordafinance.com.hk/ kate.lam@pordafinance.com.hk/ fiona.ko@pordafinance.com.hk Tel: +852 3150 6788