361 Degrees International Ltd. · HKEX:1361
361 Degrees International — FY2015 Earnings Presentation
37 slides from 361 Degrees International's earnings presentation, March 2016
Slide 1: 361 Degrees International Limited 2015 Annual Results
361 Degrees International Limited （Stock code: 1361:HK） 2015 Annual Results March 2016
Slide 2: Disclaimer
Disclaimer These presentation slides have been prepared by 361 Degrees International Limited (the “Company”) solely for us during its presentation held in connection with its interim results for the year ended 31 Dec 2015 and may not be reproduced or redistributed. In particular, these presentation
Slide 3: Agenda
Agenda 1 Operating Strategies 2 Financial Highlights 3 Operational Highlights 4 Industry Outlook 5 Q&A 3
Slide 4: Operating Strategies
a / Operating Strategies
Slide 5: Operating Strategies
Operating Strategies 1. Bright Market Prospects In China, “sports for all” has become new social ethos. The sporting goods industry possesses huge potential with bright prospects worldwide. Multi-brand development strategy 2. Forward-looking to support the growth of five Operating Strategies busines
Slide 6: Financial Highlights
a / Financial Highlights
Slide 7: 2015 Key Financial Highlights
2015 Key Financial Highlights For the year ended 31 December RMB mn 2015 2014 Change Turnover 4,458.7 3,906.3 +14.1% Gross profit 1,823.0 1,596.8 +14.2% Operating profit 914.7 724.2 +26.3% Profit attributable to equity shareholders 517.6 397.6 +30.2% Basic EPS (RMB cents) 25.0 19.2 +30.2% Profitabil
Slide 8: 2013-2015 Turnover
2013-2015 Turnover RMB mn Gross margin (%) 5,000 45% 40.9% 40.9% 39.5% 4,500 40% Turnover increased by 14.1％ to RMB 4,458.7 million, mainly 4,000 because: 35% 3,500 30% Order of 2015’s 3,000 spring/summer, autumn and 25% winter trade fair rose by 11%, 2,500 16% and 18%, respectively 4,458.7 20%
Slide 9: Overall Turnover Mix
Overall Turnover Mix 13.2% 13.0% 2.0% 2.3% Footwear 42.3% 39.8% 2014 Apparel 2015 RMB 3,906.3 mn RMB 4,458.7 mn Accessories 361° Kids 44.9% 42.5% 1. Footwear products recorded outstanding performance, with a surge in both average selling price and volume. Its turnover contribution rose to 42.3%. 2.
Slide 10: Turnover Analysis - by Product
Turnover Analysis - by Product Footwear Apparel RMB mn Gross margin (%) RMB mn Gross margin (%) 2,100 60% 2,000 60% 1,800 50% 50% 40.9% 43.0% 40.9% 38.6% 1,500 40% 40% 1,200 30% 30% 900 1,884.8 20% 20% 1,554.3 1,895.9 600 10% 10% 1,753.9 300 0% 0% 0 -10% 1,600 -10% 2014 2015 2014 2015 Footwear Appar
Slide 11: Turnover Analysis – 361° Kids
Turnover Analysis – 361° Kids RMB mn Gross margin (%) 600 60% 580 50% 361°Kids 40.7% 41.0% Turnover grew by 16.0% to RMB 588.9 560 40% million, the increase reflected the established customer base for the kids 540 30% business, a segment that has continued to demonstrate its potential for further
Slide 12: Operating Expenses Analysis
Operating Expenses Analysis Selling and Distribution Costs Administrative Expenses For the year ended 31 Dec For the year ended 31 Dec RMB mn RMB mn 2015 2014 Change 2015 2014 Change R&D 139.6 95.7 +45.9% A&P 570.5 653.0 -12.6% Depreciation 42.7 35.1 +21.7% Packing 48.1 38.4 +25.3% Staff costs 86.2
Slide 13: Operating Cashflow
Operating Cashflow For the year ended 31 December RMB mn 2015 2014 Operating profit 914.7 724.2 Change in inventories 18.1 (160.7) Change in trade and bills receivables (596.9) 371.1 Change in trade and other payables (152.2) 458.1 Change in deposits, prepayments and other 256.6 (243.3) receivables
Slide 14: Working Capital Cycle
Working Capital Cycle Working Capital Turnover Days For the year ended 31 December days 80 Turnover days 2015 2014 Change Inventories 78 77 +1 Trade and bills receivable 160 167 -7 75 Trade and bills payable 169 169 - 69 Overall working capital 69 75 -6 60 2014 2015 14
Slide 15: Balance Sheet Highlights
Balance Sheet Highlights As at 31 December RMB mn 2015 2014 Change Current assets 7,354.7 7,224.4 +1.8% Current liabilities 1,930.4 2,012.8 -4.1% Net current assets 5,424.3 5,211.6 +4.1% Current asset ratio (times) 3.8 3.6 0.2 times Equity attributable to owners of the 5,282.6 4,965.0 +6.4% company
Slide 16: Trade Debtors and Ageing Analysis
Trade Debtors and Ageing Analysis As at 31 Dec 2015 As at 31 Dec 2014 RMB ‘000 Trade debtors 2,097,831 1,604,395 Over 75% of trade debtors are within 90 Less: Allowance for doubtful debts (80,155) (80,155) days aging from invoicing 2,017,676 1,524,240 Bills Receivable 235,510 132,013 2,253,186 1,6
Slide 17: Maintain a Strong Financial Position
Maintain a Strong Financial Position RMB ‘000 Effective interest rate (%) At 31 Dec 2015 At 31 Dec 2014 2015 2014 Pledged bank deposits 122,026 175,895 0.39 – 3.10 0.39 – 3.10 Deposits with bank with maturities > 3mths 1,500,000 1,800,000 1.95 – 2.36 3.30 – 3.80 Cash and cash equivalents 2,286,225 2
Slide 18: Operational Highlights
/ a Operational Highlights 18
Slide 19: 361° Branding
361° Branding Branding 361° is an integrated international sportswear brand that engages in brand, R&D, design, manufacturing and distribution 1 361°Kids is a kids brand serving children between the ages of 3 and 12; it is an independently-run business unit but uses the 361° brand and the distributi
Slide 20: 361° Business Model
361° Business Model Business Model Apart from ONE WAY, the 361° Group operates a wholesale franchised business model, through 31 exclusive distributors operating 7,208 stores nationwide A profitable business model for distributors and retailers. Distributors can enjoy 65% off for wholesale price
Slide 21: Multi-brands and New-channel
Multi-brands and New-channel ONE WAY 361° International A 70/30 JV with One Way Sport Oy established in 2013. Overseas business unit was established in 2014 with senior JV has exclusive rights for Greater China area executives based in Taiwan and the United States 47 self-operated outlets in 2
Slide 22: 361° Brand Positioning
361° Brand Positioning fF Premium ee 10 761 1 5 3 > Performance 2 4 = Lwin | 556) Mass Market 22
Slide 23: Building the 361° Brand
Building the 361° Brand The 361° Group generally spends between 10-12% of its turnover on brand promotion Event sponsorship costs are amortized over the relevant contract periods Major Events Sponsorships Celebrity Endorsements 2010 2011 Basketball Running Football Innofashion Stephon Marbury De
Slide 24: 361° Sales Network
361° Sales Network Sales Network Northern region 2,744 Western region 1,470 Eastern region 1,760 Approximately 1,500 “2-in-1” or “3-in-1” composite stores Southern region Total: 7,208 1,234 2014 2015 8.6% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 19.7% Openings 159 352 404 469 249 249 265 264 Total: 100% First-tier
Slide 25: 361° Operational Data
361° Operational Data Number of Stores & SSSG Channel Inventories (times) Number of stores SSSG 4.5 4.3 5,000 8.1% 7.9% 10% 4.2 4.2 4.2 7.2% 4.1 4.1 4.1 4,000 6.3% 8% 4 5.5% 3,000 4.7% 6% 4 2.8% 2,000 1.8% 4% 1,000 4,155 4,068 3,916 3,819 3,772 3,707 4,097 3,864 2% 0 0% 3.5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q
Slide 26: 361° Kids Highlights
361° Kids Highlights Store network Turnover (RMB million) Northern region 708 588.9 507.5 Western region 420.4 333 370.1 Eastern region 238.7 771 37.6 Southern region Total: 2,350 538 2010 (1) 2010(1) 2011 (1) 2011(1) 2012 2013 2014 2015 2014 2015 10.9% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Net change in numb
Slide 27: Building the 361° Kids Brand
Building the 361° Kids Brand Now generally regarded as a leading Kids brand in China Sponsorship of the “Let's Sing, Kids” on Hunan TV, China's leading satellite channel Signed Barna Kuyliri, Jasmyn Aisin Gioro, and Zhou Zhangchi as spokespersons 27
Slide 28: 361° Innovative Smart Products
361° Innovative Smart Products + + Smart Shoes In collaboration with Baidu Inc., in March Signed Strategic Alliance Smart shoes will conduct in-depth 2015, 361° kids smart shoes were Contract in June 2015 to develop research in music and big data, successfully launched, the first such smart sp
Slide 29: 361° E-commerce Business
361° E-commerce Business Current contribution: 50% Current contribution: 50% On-line exclusive products Assisting sales of off-line stores Target contribution: 20% Target contribution: 80% 29
Slide 30: 361° Corporate Social Responsibility
361° Corporate Social Responsibility The “One cares One” public welfare project aims at helping children in poor mountainous regions of China. When consumers purchase the appointed products, “One cares One” will donate a pair of kids’ shoes on their behalf 361° Sports, 361° Kids and Innofashion
Slide 31: Outlook
Outlook OFFICIAL SUPPORTER
Slide 32: Optimistic Industry Outlook
Optimistic Industry Outlook Market size continues to grow Huge room for development Market size of China’s sports apparel market Market size of China vs U.S. China vs U.S. spending on sports shoes and apparel sports equipment per capita RMB bil RMB bil USD 284.9 31.5% 211.7 564.5 195.4 180.3 166.5 1
Slide 33: Optimistic Industry Outlook (cont’d)
Optimistic Industry Outlook (cont’d) Favorable Government Policies Structural Tailwinds No. 46 Guidance issued by the State Council The State Council issued “Opinions on Accelerating the Development of Sports Industry to Promote Sports Consumption” (No. 46 Guidance), which clearly outlined that by 2
Slide 34: 361° Outlook: One Extra Degree of Perfection
361° Outlook: One Extra Degree of Perfection Continue to enhance R&D capabilities An R&D team of nearly 300 staff, which works closely with the Beijing Institute of Fashion Technology R&D expenses account for approximately 3.1% of turnover Focus on core products that are well-received by consu
Slide 35: 361° Outlook: One Extra Degree of Perfection (cont’d)
361° Outlook: One Extra Degree of Perfection (cont’d) Enhance functionality of Continue to cater products for the mass Quickly establish Continue to focus on market, increase Increase same e-commerce functional footwear such product store sales model to achieve as running shoes competitiveness gro
Slide 36: Q&A
Q&A 36
Slide 37: Thank you!
Thank you! 37
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