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ANTA Sports Announces 2011 Interim Results Sustained Growth Momentum with Solid Financial Performance

Well-equipped to Tap the Business Potential in an Ever-changing Market Focused on Strengthening our Lead in the Mass Market

(8 August 2011, Hong Kong) ANTA Sports Products Limited ("ANTA Sports" or the "Company", stock code: 2020) is pleased to announce the interim results of the Company and its subsidiaries (the "Group") for the six months ended 30 June 2011 (the "period").
 
Results Highlights
 
  Six months ended 30 June  
  2011 2010 Change
  RMB million RMB million  
Turnover 4,451.4 3,453.1 28.9%
Gross profit 1,905.1 1,509.8 26.2%
Profit from operations 1,096.5 894.8 22.5%
Profit attributable to equity shareholders 927.3 760.2 22.0%
Free cash inflow 600.2 735.5 (18.4)%
       
  RMB cents RMB cents  
Basic earnings per share 37.18 30.50 21.9%
       
Interim dividend per share HK cents HK cents  
-Interim 26.0 20.0 30.0%
       
Gross profit margin 42.8% 43.7% (0.9)% pts
Operating profit margin 24.6% 25.9% (1.3)% pts
Margin of profit attributable to
    equity shareholders
20.8% 22.0% (1.2)% pts
 
 
Financial Summary & Operational Performance
 
Sustained solid financial performance
  ‧Turnover increased by 28.9% to RMB 4.45 billion (2010 1H: RMB 3.45 billion), attributable to additional product offerings, the expansion of the distribution network and the increase in average selling prices
  ‧The Group's gross profit margin maintained the same level as 2010 full year at 42.8%
  ‧Profit attributable to shareholders increased by 22.0% to RMB 927.3 million
  ‧In view of the notable results for the period, the Board of the Company proposed an interim dividend of HK26 cents per share (2010 1H: HK20 cents), making a payout ratio of 57.9 % of the 2011 1H interim profit attributable to equity shareholders to provide a better return to shareholders
   
Distribution network expansion and sales floor area optimisation
  ‧Number of ANTA stores across China increased to 7,844 as compared to 7,549 at the end of 2010, representing a net increase of 295 stores
  ‧Total sales floor area increased to 937,000 sq. m. as compared to 872,000 sq. m. at the end of 2010
  ‧Average sales floor area per store increased to 119 sq. m. as compared to 116 sq. m. at the end of 2010
  
 
Business Review
 
Further enhanced strong brand equity with diversified marketing initiatives
 
We continually strive to enrich our endorsement and sponsorship resources and integrate these resources with interactive marketing campaigns so as to promote ANTA’s professional image and quality products to target consumers. During the period, the Group has further collaborated with the Chinese Olympic Committee (“COC”) and Chinese Sports Delegation (“CSD”) to reinforce our brand’s leading position while supporting sports development in China. Equipped with ANTA sportswear in the opening, closing and award ceremonies, the elite athletes achieved remarkable results in the 7th Asian Winter Games in February. In June, ANTA Sports also sponsored the Olympic Day Run to celebrate International Olympic Day and to promote the “Sports for All” movement across China, which attracted a record number of nearly 30,000 long-distance runners in 9 cities.
 
ANTA Sports also endeavours to direct substantial marketing resources towards basketball and running, the two most frequently-participated sports in China. Our marketing initiatives with NBA stars including “Reach Higher” featuring Kevin Garnett, and Luis Scola’s third China Tour, as well as innovative activities co-launched with the CBA such as the All-star Weekend and “All-star North or South” Champion Vote, robustly enhanced the link between ANTA and the sport, and also provided a strong impetus with regard to the promotion of the sport in China.
 
Meanwhile, the Group continues to focus on highlighting our advanced footwear technologies through different promotional channels to increase the correlation between ANTA and running. An integrated marketing campaign featuring A-Jelly running shoes, including TV commercials, in-store marketing and online games, besides an interactive website has been launched to reinforce our brand desirability and enhance the sales performance of our running series.
 
Furthermore, the Group has enhanced our efforts to promote the expanded women's sportswear series to capture the growing potential in the female sports market. ANTA Sports has appointed Guo Jingjing, Olympic medallist and China's "Diving Queen", Jane Zhang, pop singer and leading tennis player Zheng Jie to endorse the new collection. We believe that higher sports participation among women will contribute greatly to the overall development of the industry.
 
Strategically optimised distribution network to maintain leadership in mass market
 
ANTA Sports is dedicated to sustaining the strength of our distribution network. We continue to penetrate into high growth areas and optimise the quality and profitability of ANTA stores. As at 30 June 2011, the Group managed a nationwide network, with total store numbers growing to 7,844 through approximately 60 regional distributors. The Group has also expanded our retail presence so as to capture the potential in the sports lifestyle and kids’ markets. Moreover, we have spared no effort to monitor the network performance and to give network partners guidance and training support.  The Group has also been strategically expanding our presence in online business and collaborating with popular e-commerce platforms, including taobao.com, letao.com, amazon.cn and okBuy.com to reach more online shoppers.
 
During the period, the Group's brand new 6th generation stores and 16 ANTA flagship stores with enhanced settings and displays have added value to our consumers' shopping experience. The Group has also set up "COC Corner" and "Grand Basketball Corner" in key stores to highlight the features of our special products series. In addition, by collaborating with our overseas distributors, ANTA has further penetrated Southeast Asia, Eastern Europe and the Middle East during the period and has progressively enhanced our presence in high potential overseas markets.
 
  30 Jun 2011 31 Dec 2010 Net increase
ANTA stores      
‧Eastern region 2,800 2,743 +57
‧Southern region 2,386 2,268 +118
‧Northern region 2,658 2,538 +120
Total number of ANTA stores 7,844 7,549 +295
       
Sports Lifestyle series stores 920 749 +171
Kids series stores 506 383 +123
 
 
 Advanced R&D capabilities and effective supply chain
 
The recognition of ANTA as China's top seller of travel and sports shoes for 10 straight years illustrates our advanced technology and cutting-edge design. To maintain our popularity in the mass sportswear market, the Group not only devotes increasing resources to foster our internal R&D capabilities, but also further collaborates with external institutions to explore new inspirations. Apart from the cooperation with DuPont and 3M, ANTA Sports also works with Outlast Technologies, Inc. to launch products which interact with the wearer's body and the environment to moderate temperature and enhance comfort levels. During the period, the Group introduced 1,200, 2,000 and 800 new styles to the footwear, apparel and accessory portfolios respectively, to promote consumer excitement, and to cater for the needs of both professional users and casual consumers.
 
Our flexible supply chain and solid execution capabilities allow ANTA Sports to promptly respond to the ever-changing market. Amid escalating inflationary pressures, our procurement team has strengthened our cost monitoring and control systems to keep us and our supply chain partners abreast of cost trends and thus ensure that timely and appropriate decisions are made. ANTA Sports optimises the workflow and manufacturing processes of our production bases so as to stay cost competitive and flexible.
 
Prospects

Looking ahead, the uptrend in consumer prices will likely carry over into the second half of 2011, which may weaken consumer confidence and put a slight drag on consumption growth. Nevertheless, the nation's 12th five-year plan will continue to enhance purchasing power, urbanisation and sports participation, which will combine to further fuel the growing demand for sportswear.
 
The Group is determined to further strengthen ANTA's brand equity and achieve an even stronger link with our consumers. We aim to do so by maximising the effectiveness of our comprehensive sponsorship and endorsement portfolio. Meanwhile, with our in-depth experience we are well prepared to outfit the COC and CSD with the most eye-catching and highest quality sportswear for the London 2012 Olympics.
 
To better cater to the growing demand from female consumers, the Group will further diversify our women's product portfolio. We will also capitalise on this market potential by optimising technology and design across our entire product range. We will integrate more functional, athletic-fit fabrics and stylish design elements to our products. Moreover, we will leverage our solid R&D resources to both upgrade the protection and comfort levels of our basketball and running series and continue to lead the market with our strength in innovation. The Group is highly responsive to the demands of style-conscious young people and children. As such, we are fully devoted to expanding the product mix of our Sports Lifestyle and Kids Sportswear series. Furthermore, the Fila business in the PRC, with its unique brand positioning and differentiated products, offers a long-term growth opportunity for the Group in the high-end market.
 
The Group continues to foster the sustainability and profitability of our distribution network, a key competitive edge that helps us outperform in China's sportswear market. We also have a well-planned strategy for store expansion and enhancement in place and are dedicated to reinforcing the network's penetration in the fast-growing mass market. We will continue with our progressive IT system enhancement to strengthen our network surveillance and responsiveness to market changes. By the end of 2011, the Group plans to expand our network to 8,200 ANTA stores, 1,100 Sports Lifestyle series stores, 600 Kids series stores and 300 FILA stores.
 
Mr. Ding Shizhong, Chairman and CEO of ANTA Sports, said, "Chinese consumers are becoming more sophisticated and demanding more differentiated sports products. We will continually enhance our brand equity, innovation and network quality to sustain healthy growth and reinforce our leadership amid keen market competition, as well as help our supply chain and network partners to stay competitive. We will always hold fast to the mission of creating value for stakeholders over the long run. We remain devoted to seizing every opportunity to expand our market share and to prudently mitigate business risks in this growing and increasingly consolidated industry."

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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 established 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:    ir@anta.com / ir@anta.com.hk
 
Hill & Knowlton Asia Limited
Gary Li       
Tel:        (852) 2894 6239 / 9652 9002   
E-mail:    gary.li@hillandknowlton.com.hk
Jacqueline Lee
Tel:        (852) 2894 6221 / 9743 8585
E-mail:    jacqueline.lee@hillandknowlton.com.hk