Li Ning Company Limited · HKEX:2331
Li Ning — FY2005 Earnings Presentation
31 slides from Li Ning's earnings presentation, Mar 23, 2006
Slide 1: 2005 Annual Results Corporate Presentation
2005 Annual Results Corporate Presentation March 23, 2006
Slide 2: Agenda
Agenda Key Accomplishments in 2005 Financial Review Corporate Governance Business Review Future Outlook and Strategies Open Forum 1
Slide 3: Key Accomplishments in 2005
Key Accomplishments in 2005 —— A Year of Remarkable Strides 2
Slide 4: Key Accomplishments
Key Accomplishments Recognition from Investment Community Included as one of the constituent stocks of MSCI China Index Series, and Hang Seng Composite, Hang Seng Free Float Index Series Award-winning LI-NING brand Named as “My Favorite China Brand in 2005” organized by CCTV A Responsible Corp
Slide 5: Five Consecutive Years of Remarkable Growth
Key Accomplishments Five Consecutive Years of Remarkable Growth Turnover (RMB Mn) 3,000 2,451 Strong consecutive growth 2,500 1% attributable to: 2,000 : 35. 1,878 GR Reputable LI-NING brand CA 1,500 1,276 Strong product design and 958 1,000 735 development capability 500 Flexible and efficien
Slide 6: Financial Review
Financial Review 5
Slide 7: Financial Highlights
Financial Highlights 2005 2004 Change For the year ended 31 Dec (RMB Mn) (RMB Mn) (As restated)* Turnover 2,450.5 1,878.1 30.5% Gross profit 1,152.5 873.5 31.9% Gross profit margin (%) 47.0% 46.5% 0.5% Operating profit 271.5 180.4 50.5% Operating margin (%) 11.1% 9.6% 1.5% Profit before tax 273.5 18
Slide 8: Turnover Analysis By Product Categories
Turnover Analysis By Product Categories 8.9 % Apparel 2005 Sales Footwear Composition 35.4 % Accessories 55.7 % For the year ended 31 Dec 2005 2004 Change (RMB Mn) (RMB Mn) Apparel 1,365.8 1,083.1 26.1% Footwear 866.7 562.9 54.0% Accessories 218.0 232.1 -6.1% 7
Slide 9: Turnover Analysis By Region
Turnover Analysis By Region Beijing & Shanghai: 6.9% Northwestern Northeastern Region: Region: 1.9% 12.5% Beijing Northern Region: 16.4% Shanghai Southwestern Region: Eastern Region: 8.5% 23.3% Central Region: International markets: 1.3% 11.7% KAPPA*: 4.7% Southern Region: * KAPPA business was dispo
Slide 10: Sustainable Margins
Sustainable Margins Margin Overview 60% 20% Gross profit margin Stable margins attributable to: 47.0% Strong product design and 47.5% development led to high 44.9% 46.5% 15% value-added, high margin 40% products 39.1% Benefited from enhanced Net profit margin 10% economies of scale 7.6% 7.4% 6.8
Slide 11: Key Financial Indicators
Key Financial Indicators 2005 2004 Change As at 31 Dec Inventories (RMB Mn) 290.6 318.3 -8.7% Inventory Turnover (days) 86 112 -23.2% Avg. A/R Turnover (days) 44 33 33.3% Avg. Trade Payables 68 77 11.7% Turnover (days) R&D Expenses 3.4% 3.6% -0.2% (as % to cost of sales) A&P Expenses 15.4% 14.3% 1.1
Slide 12: Strong Balance Sheet
Strong Balance Sheet 2005 2004 Change As at 31 Dec (RMB Mn) Cash and Cash Equivalents * 731.5 761.3 -3.9% Current Ratio (times) 3.6 3.0 20% Short-term Liabilities Nil 40 -100% Long-term Liabilities n/a n/a n/a Net Cash** 731.5 721.3 1.4% Total Liabilities to 25.6% 30.7% -5.1% total Assets Ratio Capi
Slide 13: Corporate Governance
Corporate Governance 12
Slide 14: Corporate Governance Framework
Corporate Governance Framework Accountable to Board of Directors shareholders Executive Audit Nomination Remuneration Committee Committee Committee Committee Overall Financial Advice on Performance corporate management, optimizing board based strategies risk management, composition remuneration and
Slide 15: Business Review
Business Review 14
Slide 16: Strategic Alliances with NBA
Strategic Alliances with NBA Enhancing the international profile of LI-NING brand Entered into three-year strategic marketing agreement with NBA Joint marketing campaigns with NBA Jam Van tour in China Entered into agreement in Jan 2006 with NBA player Damon Jones to become the first-ever Chinese sp
Slide 17: Strategic Alliances with CUBA
Strategic Alliances with CUBA Enhancing the domestic profile in the basketball segment Fostered an alliance with CUBA, the top 3 basketball league games in the PRC to be its official partner and sports goods sponsor Over 700 of China’s University Basketball teams took part in the last CUBA season wi
Slide 18: Cooperation with ATP
Cooperation with ATP Strengthen promotion of products with professional features A 7-year cooperation agreement with Associate Tennis Professional (“ATP”) as an Official partner of ATP in the greater China market (Hong Kong, Macau and Taiwan inclusive). Exclusive franchise rights to Li Ning Join han
Slide 19: JV with AIGLE
JV with Long-term cooperation with reputable international brand Developed a long-term alliance via the formation of a joint venture with exclusive rights to manufacture, sale and distribute AIGLE products for 50 years 18
Slide 20: Rapid Distribution and Retail Network Expansion
Rapid Distribution and Retail Network Expansion 1.3% 11.2% Franchise store sales 10.1% Turnover By Concession store sales 77.4% Retail Format Retail stores International markets LI-NING Stores 2005 Change As as 31 Dec (No. of stores) Remarks: Franchised 3,005 733 • The Group disposed of Directly man
Slide 21: Product Development: 5 Key Sports
Product Development 5 Key Sports Sports Type New Products and Features Running Basketball Soccer Tennis Fitness 20
Slide 22: A Full-Fledged Advertising and Promotion Programme
A Full-Fledged Advertising and Promotion Programme 21
Slide 23: Launch of 4th Generation Stores
Launch of 4th Generation Stores 22
Slide 24: Future Plans and Strategies
Future Plans and Strategies 23
Slide 25: Outlook and Strategies
Outlook and Strategies Outlook Strategies China sports goods market Continual network will continue to see robust expansion to increase growth in the next few years, market penetration driven by: Strengthen product design Rising consumption power and development to cater Increasing popularity of
Slide 26: Network Expansion
Network Expansion Increase the number of retail outlets to a total of 5,100 Li-Ning outlets in 2008 Launch flagship stores at prime locations in metropolitan and 1st tier cities Increase penetration Li Ning Retail Outlet in 2nd and 3rd tier cities Expansion Plan Total 2006 4,100 2007 4,600 2008 5,10
Slide 27: Product Development Direction
Product Development Direction Continue to strengthen our R&D team to launch new products of professional calibre, with innovative features and fashionable designs Collaborate with local and international suppliers and manufacturers on new materials and technologies to enhance product performance 26
Slide 28: Multi-brand Operator
Multi-brand Operator Continue to enhance the LI-NING brand profile through innovative and highly effective marketing strategies Foster long-term relationships with international brands to develop a multiple brand portfolio through market segmentation strategies 27
Slide 29: Vision, Mission & Core Values
Vision, Mission & Core Values Vision A world’s leading brand in the sports goods industry Core Mission Values Through sports, Integrity, we inspire in people professionalism, the desire and power to passion, make breakthroughs breakthroughs, and trust 28
Slide 30: Open Forum
Open Forum 29
Slide 31: IR Contact
IR Contact To know more about Li Ning Company Limited, please visit http://www.lining.com http://www.irasia.com/listco/hk/lining/ http://www.hkex.com.hk For enquiries, please contact: WANG Yong Investor Relations Manager Tel: +86 21 5879 7298 Email: yong.wang@lining.com 30