361 Degrees International Ltd. · HKEX:1361

361 Degrees International — FY2011 Earnings Presentation

23 slides from 361 Degrees International's earnings presentation, March 2012

  1. Slide 1: 361 Degrees International Limited Annual Results Presentation 2011

    361 Degree International Limited Annual Results Presentation 2011 March, 2012

  2. Slide 2: Disclaimer

    Disclaimer The information contained in this presentation is intended solely for your personal reference. Such information is subject to change without notice, its accuracy is not guaranteed arid it may not contain all material information concerning 361 Degrees International Limited (the "Company")

  3. Slide 3: Table of Contents

    361 Degrees International Limited Annual Results Presentation 2011 Table of Contents 1. Operational Highlights 1 2. Financial Review 9 3. Outlook and Strategies 16 4. Q&A 17

  4. Slide 4: 1. Operational Highlights

    361 ee 1. Operational Highlights

  5. Slide 5: 2011 has been a very difficult year for the industry with intensified competition and heavy discounting

    2011 has been a very difficult year for the industry with intensified competition and heavy discounting  Tight monetary policies, slowing export orders, rising costs and labor shortages have made manufacturing in China increasingly difficult  Competition has intensified with major brands resorting

  6. Slide 6: Strong same store sales for the best part of the year although momentum weakened by 4Q

    Strong same store sales for the best part of the year although momentum weakened considerably by 4Q CY2011 Q1 Q2 Q3 Q4 (1) SSS 14.7% 18.1% 14.1% 9.4% (2) Channel Inventories 3.3x 3.9x 3.8x 4.2x Trade Fair Orders 2011 Winter 2012 Spring/Summer 2012 Autumn 2012 Winter April 2011 July 2011 November 201

  7. Slide 7: Network has expanded modestly even as there are signs of saturation in certain provinces

    Network has expanded modestly even as there are signs of saturation in certain provinces 2011 2010 No. of Stores (1) No. of retail outlets 7,865 7,263 No. of retailers 3,410 3,459 Average No. of stores per retailer 2.3 2.1 Northern Region 3,049 Total retail space (sq.m.) 790,403 732,677 Western Regi

  8. Slide 8: 361° Kids' business has built a strong foundation and begins to make meaningful contributions

    361° Kids’ business has built a strong foundation and begins to make meaningful contributions 2010 2011 2011 2012 Fall/Winter Spring/Summer Fall/Winter Spring/Summer Order Book Growth Inaugural fair 300% 60% 53% Number of dedicated outlets Number of dedicated outlets by region:  This business unit

  9. Slide 9: ePOS now covers over 60% of the group's outlets and has started to deliver good market intelligence

    ePOS now covers over 60% of the group’s outlets and has started to deliver good market intelligence Coverage by stores:  About 500 outlets are directly linked to the central servers in Xiamen, providing online and real-time 63.0% data 58.0% 54.0%  ePOS data is now analyzed and fed into product cyc

  10. Slide 10: Wuli production plant offers state-of-the-art processes

    Wuli production plant offers state-of-the-art processes with best practices in production and worker’s amenities Production Line Number Annual Production Cap Footwear 23 Line(1) 21 million pairs Apparel 1 Workshop 10 million pieces Floor Plan of Wuli Production Facilities Footwear Production Lines C

  11. Slide 11: 361° brand equity has strengthened significantly to command higher retail prices

    361° brand equity has strengthened significantly to command higher retail prices Key Strategic Partners Major Event Sponsorships Celebrity Athlete Endorsements Steve Hooker Kevin Love  361 is still focused on developing a multi-sport emphasis through key sponsorships of major international events o

  12. Slide 12: R&D spending, now at 1.5% of revenue, will continue to increase

    R&D spending, now at 1.5% of revenue, will continue to increase in the coming years  The Company has now established two key partnerships for research and development, in Beijing and Guangzhou, for apparel and footwear respectively. They employ over 300 staff who are engaged in identifying and test

  13. Slide 13: 2. Financial Review

    361 ee 2. Financial Review

  14. Slide 14: 2011 financial highlights

    2011 financial highlights For the year ended 31 December 2011 2010 Change (%) (RMB mil unless indicated otherwise) Turnover 5,568.7 4,849.0 +14.8 Operating profit 1,385.0 1,146.8 +20.8 Net income 1,133.1 982.8 +15.3 Basic EPS (RMB cents) 54.8 47.6 +15.1 Dividend per share (HK cents)  Final 8.6 N/A

  15. Slide 15: Revenues improved by almost 15% because of a solid performance by footwear

    Revenues improved by almost 15% because of a solid performance by footwear For the year ended 31 December (RMB ’000) 2011 2010 Change (%) 361 Kids 3.4% Accessories 361° Products - Adults (3.3%) and others Footwear 2,813,015 2,069,064 +36.0% 2.1% (1.8%) Apparel 2,452,216 2,532,034 -3.2% Accessories a

  16. Slide 16: Revenue remains largely dependent on footwear and apparel sales driven by volume and ASP increases

    Revenue remains largely dependent on footwear and apparel sales driven by both volume and ASP increases Sales Volume Average Selling Price ( ’000) For the year ended 31 December 38,873 (RMB ’000) 2011 2010 Change (%) Footwear 102.6 83.3 +23.2% Apparel 94.7 65.1 +45.5% 27,407 Accessories and others 1

  17. Slide 17: Strong network presence in the western and northern regions will continue to provide solid support

    Strong network presence in the western and northern regions will continue to provide solid support For the year ended 31 Dec (RMB ‘000) 2011 2010 Change (%) (1) Eastern 1,284,743 1,152,477 +11.5% (2 Southern 1,253,969 1,177,693 +6.5% (3) Western 1,007,115 810,740 +24.2% (4 Northern 2,022,851 1,708,1

  18. Slide 18: Margins showed slight improvement in 2011 and will probably remain relatively stable in 2012

    Margins showed slight improvement in 2011 and will probably remain relatively stable in 2012 Gross Profit and Gross Margin Operating Profit and Operating Margin (RMB mn) (RMB mn) 3,000 45% 2,000 30% 2,362.8 2,500 1,385.0 2,010.5 1,500 2,000 1,146.8 42.4% 1,500 41.5% 40% 1,000 25% 1,000 24.9% 500 23.

  19. Slide 19: Below the line costs have increased with the larger scale of operations

    Below the line costs have increased with the larger scale of operations Total Expenses (% of turnover)  Selling and distribution expenses increased by more than 12% primarily 15% 13.8% 13.5% because of a larger spend in advertising and promotion expenses.. These have 12% increased because of new co

  20. Slide 20: Accounts receivables have declined significantly in the 1Q of FY2012

    Because of a difficult 2011, the group has leveraged on its financial strength to help distributors, retailers and suppliers Average inventory turnover cycle Average trade and bills receivables turnover cycle 50 150 40 119 40 120 95 30 22 90 20 60 10 30 0 0 2010 2011 2010 2011 Average trade and bill

  21. Slide 21: 3. Outlook and Strategies

    361 ee 3. Outlook and Strategies

  22. Slide 22: 361 Degrees will emerge even stronger

    361 Degrees will emerge even stronger  361 Degree expects 2012 to be a year of consolidation with inventories of most companies moderating Industry Outlook  The Group believes that industry growth will not exceed China’s GDP growth rate at 7.5%  361 Degree will continue to invest in brand and R&D

  23. Slide 23: 4. Q&A

    4. Q&A

361 Degrees International — FY2011 Earnings Presentation on 6ix