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ANTA Sports Announces 2011 Annual Results Upheld Leading Position and Maintained Healthy Financial Performance

Continues to Enhance Strong Brand Equity, Healthy Distribution Network and Innovative Product Creation

(20 February 2012, Hong Kong) ANTA Sports Products Limited ("ANTA Sports" or the "Company", stock code: 2020) is pleased to announce the annual results of the Company and its subsidiaries (the "Group") for the year ended 31 December 2011 (the "year").
Results Highlights
  Year ended 31 December  
2010 Change
  RMB million RMB million  
Turnover 8,904.8
7,408.3 +20.2%
Gross profit 3,762.4 3,170.6 +18.7%
Profit from operations 2,011.5
1,736.8 +15.8%
Profit attributable to equity shareholders 1,730.1 1,551.1 +11.5%
Free cash inflow 1,219.5 1,269.0 -3.9%
  RMB cents RMB cents  
Basic earnings per share 69.37 62.21 +11.5%
Dividend per share HK cents HK cents  
-Interim 26 20  
-Final 26 25
  52 45 +15.6%
Gross profit margin 42.3% 42.8% -0.5%pts
Operating profit margin 22.6% 23.4% -0.8%pts
Margin of profit attributable to equity shareholders 19.4% 20.9% -1.5%pts
Financial Summary & Operational Performance
‧Financial performance
‧Turnover increased by 20.2% to RMB 8.90 billion (2010: RMB7.41 billion), attributable to strong brand equity, healthy
    distribution network and innovative product creation
‧The Group’s gross profit margin was 42.3% (2010: 42.8%)
‧Profit attributable to shareholders rose 11.5% to RMB 1.73 billion (2010: RMB1.55 billion)
‧The Board proposed a final dividend of HK26 cents per ordinary share (2010: HK25 cents per ordinary share) in view of
    the satisfactory and healthy financial performance
‧Together with an interim dividend of HK26 cents per ordinary share (2010: HK20 cents per ordinary share), represent a
    payout ratio of 61.1% of profit attributable to equity shareholders for the year
‧Working capital management and cash flow
‧Average inventory turnover days: 38 days (2010: 36 days)
‧Average trade receivables turnover days: 26 days (2010: 19 days)
‧Average trade payable turnover days: 37 days (2010: 36 days)
‧Free cash inflow reached RMB1,219.5 million (2010: 1,269.0 million)
‧Prudent and flexible arrangements to maintain healthy sustainable growth in coping the challenging macroeconomic
    landscape and sportswear industry in China
‧To be more prudent when reviewing store expansion plans and control inventory level more effectively
‧To adopt a more flexible arrangement for processing new orders and replenishing orders
‧To optimise overall quality and operational efficiency of distribution channels
‧To further strengthen strong brand equity and product differentiation
‧Distribution network and sales floor area optimisation
‧Number of ANTA stores across China increased to 7,778 as compared to 7,549 at the end of 2011, representing a net
    increase of 229 stores
‧Total sales floor area increased to 959,000 sq. m. as compared to 872,000 sq. m. at the end of 2010
‧Average sales floor area per store increased to 123 sq. m. as compared to116 sq. m. at the end of 2010
Business Review
We are dedicated to strengthening brand equity amid market challenges
The Group has focused on implementing an effective brand management strategy to strengthen our brand differentiation and desirability for the long term growth. The Group further integrated our unique endorsement and sponsorship resources with interactive marketing campaigns to promote ANTA’s professional brand image and product quality. During the year, the Group has focused on promoting our brand and products through the association with popular sports and influential events. In view of the London Olympics to be held this year, we joined hands with the Chinese Olympic Committee ("COC") to co-host a series of events to boost the public’s enthusiasm for the world’s largest sporting event. We launched a retro edition of the winning outfit to celebrate the one-year countdown to the London Olympics and to commemorate the milestone of Xu Haifeng winning China’s first-ever Olympic gold medal in 1984. In addition, the Group kicked off the rebranding plans and rolled out marketing campaign to boost FILA’s brand recognition and desirability during the year, and we have further optimised FILA stores to echo it’s stylish, casual and sporty image.
The Group has strategically directed marketing resources to basketball and running, enhancing our brand association with two of the most popular sports in China. During the year, the Group launched a well-rounded marketing campaign "Basketball is My Life", which integrates our basketball sponsorship resources with featured products and in-store POPs, to strengthen ANTA's leading position in the basketball segment. Meanwhile, the Group integrates TVCs and in-store marketing events to highlight our advanced footwear technologies in order to strengthen the connection between ANTA and running. The Group utilises various online marketing platforms, including interactive online games, website and weibo, to raise public awareness of our products and extend our reach to boost sales.
Riding on the growing potential in women sports, China's "Diving Queen" Guo Jingjing, pop singer Jane Zhang have joined our endorsed tennis star Zheng Jie to promote our diversified women's sportswear series in the "Rhythmic Bloom in the Heart" marketing campaign.
We strategically adopt flexible approach to help distribution network stay competitive
In view of the intensifying competition and market changes, the Group has adopted a flexible approach in opening and consolidating stores to enhance network efficiency. We prioritised our strength on enhancing store efficiency over store number expansion in order to maintain sustainability in the ever-changing market. During the year, the Group prudently penetrated into high growth areas while consolidating smaller stores. As at 31 December 2011, the number of stores increased to 7,778 with a net increase of 229 compared to the same period of last year. The Group has further optimised the management system and closely worked with distributors and franchisees to monitor retail performance and to identify network issues effectively. During the year, the Group took another leap forward by launching the 6th generation stores with better store image. Furthermore, the Group progressively enhanced footprint in the online business by collaborating with popular e-commerce platforms, as well as launching official online flagship stores at S.CN and 360buy to reach more online shoppers.
  31 Dec 2011
31 Dec 2010 Changes
ANTA stores      
‧Eastern region 2,602 2,743 (141)
‧Southern region 2,403 2,268 135
‧Northern region 2,773 2,538 235
Total number of ANTA stores 7,778 7,549 229
Sports Lifestyle series stores 887 749 138
Kids series stores 632 383 249
We leverage strong R&D capabilities and efficient supply chain to maintain market leadership
Product innovation and quality is the key to maintain our market leadership in times of uncertainty and rapid market consolidation. The Group continues to strengthen our internal R&D and design capabilities and collaboration with external institutions to achieve important breakthroughs. Advanced technology from DuPont, 3M and Outlast Technologies, Inc. are applied to enhance the product differentiation and functionality. The Group has further optismised and diversified our technologies to different product categories, catering to both professional users and casual consumers. For example, A-HardcourtRB was designed as an outdoor basketball shoe featuring improved durability, while A-Twist and Superflexi were used in female footwear product lines to enhance protection and comfortableness during cross-training. During the year, the Group introduced 2,400, 3,600 and 1,600 new styles to the footwear, apparel and accessories portfolios, respectively.
Our flexible supply chain and solid execution capabilities allow ANTA Sports to promptly respond to the ever-changing market while ensuring that we offer our customers the best value for money. Our effective and reliable supply chain network enables the Group to make timely and appropriate decisions to respond the changes in consumer preferences and market conditions. We are also committed to optimising our operating efficiency and risk control measures so as to stay competitive amid inflationary pressures. Meanwhile, our procurement team cooperates with our supply chain partners to monitor the raw material costs and market trends, as well as to arrange the collection of material orders to enjoy mass purchase discounts.
Looking forward, the eased inflation towards the end of 2011 is generally expected to lead to loosening of current macroeconomic measures which help to boost the consumption. Nonetheless, uncertainties and keen competition continue to cast clouds over China’s sportswear market and are exacerbated by inventory overstock and discounting in its distribution channels. Therefore, we will adopt a more prudent approach and will remain devoted to reinforcing our sustainability and competitive edges amid the challenges ahead.
The Group is determined to further strengthen ANTA’s brand equity and to continue to forge strong links with consumers. We aim to do so by maximising the effectiveness of our comprehensive sponsorship and endorsement portfolio. With our strong support of the COC and intimate involvement in previous international sporting events, we are fully prepared to outfit the Chinese Sports Delegation ("CSD") and Chinese medalists with the most eye-catching and highest quality winning outfit for the London Olympics.
The Group is committed to creating innovative products to capture market potential. Our new series of lighter-weight A-Jelly running shoes will be launched to offer greater comfort to the runners. We will also further upgrade our A-HardcourtRB technology, a highly durable rubber applied to our street basketball series. To better cater to the growing and increasingly sophisticated demand from female consumers, young people and children, we will further diversify our product portfolio and integrate more stylish design elements into our products. Moreover, FILA’s unique brand positioning and its differentiated products offer long term growth opportunities for the Group in the high-end market.
The Group continues to foster the sustainability and health of our distribution channels, a key competitive edge that helps us to outperform our peers in China’s sportswear market. With the aim of reducing inventory risk in our distribution channels, we will follow market trends closely and will provide guidance to our distributors and franchisees at our trade fairs so as to ensure precision in the amount of orders placed. Moreover, we will be more prudent in the expansion of our distribution network amid the challenging environment as we strategically adjust the number of new stores. By the end of 2012, the Group plans to expand our network to 7,800-8,000 ANTA stores, 800-900 Sports Lifestyle series stores, 800-900 Kids series stores and 250-300 FILA stores.
Mr. Ding Shizhong, Chairman and CEO of ANTA Sports, said, "Despite the challenges ahead, we believe that government policies that support urbanisation, sports promotion and wage increases will continue to create highly promising opportunities in China’s sportswear market in the long run. We will consistently put our competitive advantages into full play in order to tap market potential, and will strive to take effective actions and measures to ensure the steady and sustainable development of the Group, our supply chain partners, distributors and franchisees, as well as to create value for our stakeholders in future."
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About ANTA Sports Products Limited
As one of the leading branded sportswear enterprises in China, ANTA Sports Products Limited primarily designs, develops, manufactures and markets sportswear, including sports footwear, apparel and accessories. The Group has an established an extensive distribution network with a leading presence in second and third tier cities in China under the management of regional distributors. The Group places great emphasis on branding by integrating sports resources and sponsorship, advertising and promotional activities and consistent store image to enhance brand and product differentiation. For the past ten years, its footwear has been enjoying a leading position in China’s composed index on market share.
For further information, please contact:
ANTA Sports Products Limited
Investor Relations Department
Tel:    (852) 2116-1660
Fax:    (852) 2116-1590
E-mail: /
Hill & Knowlton Asia Limited
Gary Li / Linda Pui
Tel:    (852) 2894-6239 / (852) 2894-6378