Retail sub-distributors on a wholesale basis: 5,067(2)
Exclusive rights to design, develop, manufacture and market sportswear products
Distributes through retail distributors and sub-distributors
Exclusive brand licensee agreement with Converse in the PRC expired on Dec. 31th 2008
Became exclusive distributor for PRC Converse
Remains as exclusive brand licensee for Converse in Hong Kong, Macau and Taiwan
Manufactures sports footwear at our factory in Taicang, Jiangsu Province
Capacity: 19 production lines
Avg. production 86K pairs per month
Facilitate our rollout of the “end-to-end supply chain solution”
Add “Diadora” brand into our manufacture portfolio
Major Brand Suppliers / Licensors / Customers
% of Total FY2009 1H Revenue
80.4%
7.8%
11.1%
(1) Includes the number of retail outlets directly operated by us and our minority-owned regional joint ventures (which we do not have control and the financials of which are not consolidated into our accounts) in the PRC
(2) Includes the number of retail outlets operated by our regional joint ventures’ retail distributors and outlets of PRC Converse stores as shifted from our brand licensee business
2. Unparalleled and Expanding Distribution Network
Directly Operated Retail Outlets (1)
Retail Outlets Indirectly Operated by Retail Sub-distributors (2)
We have adjusted our path in the outlet expansion and are focusing on the existing store efficiency and inventory/liquidity management while still possess the largest sportswear retail distribution network in the PRC
(1) Including the directly operated retail outlets in Hong Kong and Taiwan
(2) IIncluding PRC Converse store shifted from our brand licensee business
3. Revenue – Business Mix
Total Revenue Breakdown by Business
Key Drivers
Retail Business
This increase was primarily due to increase in the number of directly operated retail outlets, expansion on our sub-distributor network, and reclassification for sales of Converse in the PRC as the exclusive distributor
Brand Licensee Business – the decrease was primarily due to:
The expiry of our exclusive brand licensee arrangement with PRC Converse as of December 31th, 2008 (reclassification the sales to Retail)
The lower than expected sales to the retailer customers mainly due to the impact under overall business environment
Manufacturing Business
Increase in annual production capacity of our Taicang factory to 19 production lines from 15 lines as of 2008 1H
Taicang factory operated in high utilization rate with stable average sales prices
4. Financial Highlights
Profitability Data (US$ '000)
FY2008 1H
FY2009 1H
% Change
Revenue
419,627
533,895
27.2%
Gross Profit
157,662
175,145
11.1%
Share Results of Associates/JCEs
11,910
18,937
59.0%
Profit Attributable to Equity Holders
34,061
4,783
-86.0%
Profit Attributable to Minority Interest
6,437
-2,334
-136.3%
Profit of the Period
40,498
2,449
-94.0%
Profit for the period excl. fair value changes
32,487
2,380
-92.7%
Profit attributable to equity holders excl. fair value changes
26,050
4,715
-81.9%
5. Working Capital
Working Capital (Day)
FY2009 1Q
FY2009 1H
Days of Change
Average Inventory Turnover Days
144
128
-16
Average Receivables Turnover Days
43
42
-1
Average Payables Turnover Days
51
46
-5
Cash Conversion Cycle
136
124
-12
By implementing reaction plans soon after we saw the environment change, our level of inventory has been decreased from the end of last quarter
6. Conclusion
Though the short term outlook is still uncertain and challenging, we are optimistic on our long term development
