Prime Success International Group Limited 永 恩 國 際 集 團 有 限 公 司 2005 Interim Results Announcement 2005 Interim Results Announcement 22 September 2005 22 September 2005
1 Business Performance Business Performance
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 2
Business Performance Business Performance For the six months ended 30 June Change 2005 2004 ( Restated ) Turnover 1,154,576,000 839,572,000 + 38 % Gross Profit 498,560,000 305,745,000 + 63 % Gross Profit Margin 43 % 36% Improved Profit Attributable 106,334,000 66,030,000 + 61 % to Shareholders 9 % 8% Improved Net Profit Margin HK 6.74 cents HK 4.26 cents + 58 % Basic EPS 3
Turnover Breakdown by Business Turnover Breakdown by Business Brand Business Brand Business OEM Business OEM Business 31% 69% 45% 55% 2005 2004 For the six months ended 30 June 4
Turnover Breakdown by Market Turnover Breakdown by Market China China The U.S. The U.S. 30% 69% 56% 43% 2005 2004 1% 1% Others Others For the six months ended 30 June 5
Gross Profit Margin Analysis by Business Gross Profit Margin Analysis by Business 60% 52% 50% 50% 40% OEM Business 30% 24% Brand Business 19% 20% 10% 0% 2004 2005 For the six months ended 30 June 6
Net Profit Margin Analysis by Business Net Profit Margin Analysis by Business 16% 14% 13% 12% 12% 11% 10% OEM Business 8% Brand Business 6% 5% 4% 2% 0% 2004 2005 For the six months ended 30 June 7
Key Financial Figures Key Financial Figures 30 December 2004 30 June 2005 Change (Restated) +43% Cash & Cash Equivalents 181,394,000 126,893,000 +18% Shareholders Fund 628,623,000 533,720,000 +36% Bank Borrowings 134,423,000 98,527,000 Increased Gearing Ratio 21.4% 18.5% Maintained Current Ratio 1.66 times 1.60 times Maintained Debtors’ Turnover 14.0 days 13.7 days Decreased Inventory Turnover 144 days 155 days 8
9 Business Review Business Review
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 10
Brand Business Brand Business Brand Business Turnover Breakdown 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$60,428,000) Daphne 88% Shoebox 4% Adidas – Original Collection 8% 2005 For the six months ended 30 June 11
Turnover & Operating Profits by Brand Turnover & Operating Profits by Brand Turnover and Profits / (Loss) Breakdown - Brand For the six months ended 30 June Daphne Adidas Shoebox Total HK$ HK$ HK$ HK$ Turnover 695,418,000 65,963,000 31,477,000 792,858,000 Operating profits 87,398,000 3,965,000 (3,673,000) 87,690,000 /(loss) 12
Sales by Square Footage Sales by Square Footage Turnover Breakdown - Per Square Foot HK$ Daphne 134.54 Adidas-Original Collection 251.87 Shoebox 40.64 13
Own- -Brand Business Brand Business – – Own 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 over 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) 14
Own- -Brand Business Brand Business – – Own Extensive sales & distribution network in the PRC Extensive sales & distribution network in the PRC 15
Own- -Brand Business Brand Business – – Own 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 131 franchised specialty shops and over 400 points-of-sales that are set up by wholesalers 16
Own- -Brand Business Brand Business – – Own “Daphne D18”, a youth collection of “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 17
Own- -Brand Business Brand Business – – Own 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 18
Own- -Brand Business Brand Business – – Own Sales & distribution network in the PRC Sales & distribution network in the PRC 19
20 Brand Business – – -Brand Business Own- Own
Adidas – – Original Collection Original Collection Adidas 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 21
Adidas – – Original Collection Original Collection Adidas Sales & distribution network in the PRC Sales & distribution network in the PRC 22
Adidas – – Original Collection Original Collection Adidas 23
Development of Infrastructure Development of Infrastructure 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 of warehousing and transportation and further enjoy economies of scale 24
25 Prospective Prospective
Business Strategy Business Strategy Strive to secure new OEM customers and orders with higher profit margin Diversify brand business Increase Market Share Speed up the financial and Broaden Income Stream management reporting process Keep Business Growth Introduce other new brands or consumer products Target on open up oversea market 26
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 27
28 Q & A Q & A
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