2015 Annual Results Presentation. 22 March 2016

Transcription

1 2015 Annual Results Presentation 22 March 2016

2 Disclaimer Warning about Forward-looking Statements This presentation contains certain forward-looking statements in relation to the financial conditions, operating results and business of the Company. These statements represent the expectations or beliefs of the Company regarding future events, and are subject to risks and uncertainties, whether known or unknown. Such risks and factors might result in significant difference between actual results, performances or events and the results, performances or events stated or implied in such statements. Certain statements, such as those including words and expressions such as potential, estimate, expect, anticipate, target, intend, plan, believe, project and similar phrases expressed in different forms, are regarded as forward-looking statements. Forward-looking statements are subject to inherent risks and uncertainties. It should be noted that a number of factors might result in the actual outcome deviating from conditions expected or implied in the forward-looking statements, and in some cases such deviation might be significant. The contents of the forward-looking statements are updated as at the date on which such forward-looking statements are made, and should not be assumed to have been revised or updated to reflect latest information or subsequent events. Market trends and factors that are expected to affect the operating results of the Company are set out in the sections headed Business Review and Outlook and Financial Review. 2

3 Contents Business Review and Outlook Financial Review Q&A 3

4 Business Review and Outlook 4

5 Brand and Product 5

6 Enhancement of Brand Value Understanding of preferences and needs of consumers through retail end analysis to seize more business opportunities. Further penetration and emphasize of the brand DNA. Immerse and Upgrade of Star Products. 6

7 Star Products

8 The Italian word BANDA is translated into BAND in English. It also refers to as stripes on clothing, or something that encircle or binds people spiritually and morally. The string of Kappa Omini logos are presented on our products, known as logo band. The design of the 222 BANDA, either in track and field sports as well as soccer, is visible almost throughout the history of Kappa Sports. The Banda Top was worn by many celebrities and it used to lead the street culture trend in Europe. BANDA Top is the ultimate classic and signature product of Kappa brand 春夏 2015 秋季 8

9 Damon Albarn, vocal of the England band Blur Justin Bibber MV SORRY Spice Girls Kate Moss in Little Britain Kappa s Brand Ambassador :G-DRAGON 9

10 Review of Marketing Activities in 2015 Publicity Channels: new media + internet + fashion media Enhancing communication and reaction with the target consumer group Improving brand exposure and reputation :Tudou Festival 2: Kappa x Clot master 8 visual poster 3:Kappa x Feige 63 Retro Gala 9 4: Ad placement of cotton and down feather products in magazine 5: Kappa x Taihe Celebration of Sounds Music Dream Plan 10

11 Review of Marketing Activities in , 2:Kappa x Clot Launch, Edison Chen and other celebrities with Kappa products 6 3, 4:Electronic band Gemini with 8 Kappa products 5, 6:Collaboration 63 with Movie Detective Chinatown 9 11

12 Product Transformation Fashionable + Basic Auxiliary Function Back to Sports Integration of Supply Chains We are actively investigating and building a mechanism that allows our Internal system supply chain to respond quickly to demands, and have engaged in project cooperation with materials suppliers to build models for the back-up of materials. Fast-rolling development and production is also facilitated by efficient and accurate information flow and fast information sharing. Sources supplied from Japan and China Group s big data Fast response to market Centralised management of supply chains for Sino-Japan Improving quality and class of products leveraging strengths of our Japanese operations in design, pattern and sewing. Appropriate applications of shared new technologies of TC in Japan in the product design to enhance technological quality. Shared sources of materials supply in Japan enhancing quality and appearance of products DX RTC R&D centre begins to take shape on the basis of the TC model in Japan, building a solid foundation for the integration of Sino-Japan. 12

13 Kappa s Brand Ambassador in 2016 G-DRAGON 13

14 Sales and Investment 14

15 Full recovery of channels The Group had 1,267 Kappa stores, representing a net increase of 57 stores and including 397 self-owned retail stores. The comparable store performance of Kappa brand of the China segment for the full year of 2015 was increased obviouslythanks to the reform of stores. Expect low to mid-digit net growth of the opening stores in Number of Stores Comparable same-store growth 1,267 Low to Middigit growth Increased by 12.2% 1, E 2015 Note: the above represents figures as at 31 December

16 E-Commerce Sales of e-commerce in 2015 increased by 31% yoy to RMB159 million. Sales of E-commerce accounted for 15% of China sales in 2015, flat compared to The gross margin of e-commerce improved by 24 ppts to 59%. 16

17 Investment Business A new Dongxiang calls for a new strategic layout. Breakdown of Investment Assets 28% Alibaba 13% Cash and Equivalents 15% * Equity Investments Investment Partners: Yunfeng, Fosun, Citic, and etc. Invested in industries including hightech, finance service, new energy, medical and manufacturing industries etc. 44% Fixed-Income Avg. Return: 7%-8% Note: *excluding Alibaba The above represents figures as at 31 December

18 Outlook 18

19 Highlights of Future Developments Brand focus and upgrades Brand value has been increased through the adjustments of earlier stage. The Group will continue to focus on enhancing its brand value and introduce product innovation with reasonable application of resources. New business concept Further implementation of the business concept of brand + retail, prudent expansion of the retail channels and further optimization of the store layout Full integration of operations in China and Japan Integrating the resources and operations of both China and Japan to achieve a win-win situation. Ongoing diversification into new businesses Kappa Kids business Introduce Phenix, which is Japanese top winter sports brand, into China. Investment and planning the Group will continue to leverage its existing resources and strengths to enhance cooperation with its investment partners, with a view to generating long-term stable income for both the group itself and shareholders in a risk-proof approach. 19

20 Financial Review 20

21 Results Highlights Year ended 31 December Change (RMB million) (RMB million) (%) Sales 1,469 1, % Gross Profit * % Operating Profit 1, % Operating Profit excluding Investment Gain % Profit Attributable to Equity Owners % Gross Profit Margin* 56.2% 50.7% 5.5 ppts Operating Profit Margin 68.4% 78.4% ppts Operating Profit Margin excluding Investment Gain 17.7% 7.6% 10.1 ppts Net Profit Margin 54.7% 72.5% ppts Basic Earnings Per Share (RMB cents) % * Before provision for/reversal of impairment losses of inventories 21

22 Sales by Market, Channel and Product Sales by Market and Brand Sales Analysed by Channel Kappa China* Sales Analysed by Product Kappa China RMB million 1,262 1, % % RMB million % 1, % Footwear 26.0% (25.6%) 2015 Accessories 2.4% (3.2%) % 1, % % % China Japan Wholesale Retail Note: Figures in bracket represent comparative data of Apparel 71.6% (71.2%) Sales in China in 2015 increased by 27.2% to RMB1,053 million as compared to the same period last year, which were primarily due to the dedicated efforts continuously made by the Group in consolidating the business models of brand + product and brand + retail in a bid to, on the one hand, further clarify our brand images and product positioning, satisfying market demand well by elevating the quality and classiness of our products; and, on the other hand, optimize and apply a new operation model in control and management, maximizing consumers satisfaction by giving prompt response to the demand from end customers. Sales of Kappa brand products via wholesale channel in China segment increased by 17.6% to RMB628 million as compared to the same period last year and sales via retail channel increased by 41.1% to RMB402 million as compared to the same period last year. *Excluding international business and others 22

23 Gross Profit Margin By Market and Product Gross Profit Margin By Market * Gross Profit Margin By Product Kappa China * 70% 60% 50% 40% 30% 64.5% 59.8% 56.2% 50.7% 33.4% 35.3% 68% 63% 58% 53% 69.5% 67.0% 63.1% 66.1% 62.2% 60.5% 60.1% 55.2% 20% % China Japan Group total Apparel Footwear Accessories Kappa Total Year ended 31 December Year ended 31 December For 2015 and 2014, the gross profit margin of Kappa China was 67.0% and 60.5%, respectively, representing YoY improvement of 6.5 percentage points; the increase was mainly attributable to further improvement in gross profit margin of ne products for 2015, coupled with increased weighting of new products. Another contributing factor was the higher percentage share of self-owned retail operations. Gross profit margin of our Japan operations for 2015 was 35.3%, improve by 1.9 percentage points compared with * Before provision for/reversal of impairment losses of inventories 23

24 Expenses Analysis Year ended 31 December Change (RMB million) (RMB million) (%) Advertising and Selling Expenses % As a percentage of sales 17.2% 17.0% 0.2 ppts Employee Salary and Benefit Expenses % As a percentage of sales 10.4% 11.3% -0.9 ppts Design & Product Development Expenses % As a percentage of sales 2.9% 3.6% -0.7 ppts 24

25 Inventories, Trade Receivables and Trade Payables - China Inventories Trade Receivables Trade Payables RMB million Turnover days RMB million Turnover days RMB million Turnover days Year ended 31 December Year ended 31 December Year ended 31 December As at the end of December 2015, the Group reported an increase in net inventory value in China with a more positive inventory structure, while the proportion of new products had increased. As at the end of December 2015, the balance of trade receivables of the Group s China operations decreased and turnover days were also shortened. 25

26 Stable Net Cash Position Year ended 31 December As at 31 December 2015 As at 31 December 2014 (RMB million) (RMB million) Cash and bank balances 1,209 2,546 Realizable financial assets 3,960 2,780 Less: bank loans Net cash, bank balance, treasury products and others 4,714 5,326 26

27 2015 Annual Dividend RMB cents Year ended 31 December Basic earnings per share Interim dividend and special dividend per share Final dividend and final special dividend per share Annual dividend payout Ratio % 70% 27

28 Q&A 28

29 Investor Relations Contact Information 29