2011 Interim Results
Ports Design Limited (Stock code: 0589) 2011 Interim Results
This document may contain time-sensitive information which is only current as of the date of publication. In addition, this document may also contain “forward looking statements” which are subject to risks and uncertainties. No reliance may be placed on the information contained in this document or on its completeness, accuracy or fairness, nor is any responsibility accepted for any errors, misstatements, or omissions or any direct or consequential loss howsoever arising from any use of, or reliance on, this document or otherwise in connection with it. Please refer to the Company’s latest issued annual or interim report for detailed financials.
Agenda Results Highlights Retail Segment Review OEM Segment Review Others Segment Review Strategy And Outlook
1
Results Highlights Turnover up 13.8%, to RMB897.7 million Retail: SSSG at ~ 14% and accounting for 93.4% of the Group’s turnover Gross Profit up by 16.2%, to RMB732.9 million Gross Profit Margin at 81.6% (1H2010: 79.9%) Profit From Operations up by 25.8%, to RMB 286.0 million due to greater contribution from Retail segment Operating Margin at 31.9% (1H2010: 28.8%) Profit Before Tax increased by 26.6%, to RMB 297.6 million Net Profit up by 2.7%, to RMB213.8 million
2
Results Highlights Net Profit Margin at 23.8% (1H2010: 26.4%) due to higher effective tax rate Earnings Per Share: RMB0.37 (1H2010:RMB0.37) Proposed Interim Dividend of RMB0.25 per share Strong Financial Position with RMB1.08 billion in cash, cash equivalents, time deposits and pledged bank deposits with banks (FY2010: RMB1.01 billion, 1H2010: RMB1.01 billion) Gross Profit and Gross Profit Margin achieved new heights during the first half of 2011, indicating a continuous strong market leader in the high end retail industry in China Dividends proposed after the balance sheet date: RMB142.2 million, vs. RMB141.5 million on the same period in 2010 3
Results Highlights Turnover (RMB million) 1000
898
900 800 700 600
789
731
693 578
Retail: OEM:
500
Others:
400 300 200 100 0 1H2007
1H2008
1H2009
1H2010
1H2011
Segment turnover as a percentage of Group turnover (%) 1H2007
1H2008
1H2009
1H2010
1H2011
Retail
81.6
87.7
91.6
92.8
93.4
OEM
12.3
7.3
4.9
5.8
4.5
6.1
5.0
3.5
1.4
2.1
Others
4
Results Highlights Gross Profit (RMB million) 733
800 700
534
600 500
631
596
414
Retail:
400
OEM:
300
Others:
200 100 0 1H2007
1H2008
1H2009
1H2010
1H2011
Gross Profit Margin (%) 1H2007
1H2008
1H2009
1H2010
1H2011
Retail
81.5
84.1
86.2
84.8
86.3
OEM
14.9
12.8
20.1
13.9
11.6
Others
53.6
46.7
45.0
30.9
23.5
Group
71.6
77.1
81.5
79.9
81.6 5
Other Revenue Other Revenue increased significantly by 420.1%, from RMB9.7 million to RMB50.2 million, due to an increase in other operating income The company received unconditional cash grant from Xiamen Government Royalty income increased by 35.3%, from RMB3.1 million to RMB4.2 million due to the PORTS strong brand equity Design and decoration income declined due to increases in the store construction cost
RMB million
1H2010
1H2011
% Change
Other revenue
9.7
50.2
420.1%
Royalty income
3.1
4.2
35.3%
Design & decoration income
4.5
4.0
-11.6%
6
Other Operating Expenses Operating expenses rose by 20.4%, from RMB 413.0 million in 1H2010 to RMB497.0 million in 1H2011 Distribution costs rose by 23.7% due to increases in rental payments, salaries and benefits, depreciation and advertising costs Administrative expenses declined by 5.8%, mainly due to greater economies of scale Other operating expenses rose by 18.6%, mainly due to the impact from the increase in stock provision
RMB million
1H2010
1H2011
% Change
Distribution costs
345.6
427.6
23.7%
Administrative costs
43.0
40.5
-5.8%
Other operating costs
24.4
29.0
18.6% 7
Results Highlights Net Finance Income rose from RMB7.8 million in 1H2010 to RMB11.5 million in 1H2011, an increase of 47.8%, was mainly related to the HK$ loan, which caused a net finance income gain due to the strengthening of the RMB Effective Income Tax Rate rose from 11.5% in 1H2010 to 28.1%, due to the application of unified income tax rate of 25%, plus the withholding tax on the remittance of dividends to our shareholders. The Group's income tax expense grew by 210.5%, from RMB27.0 million in 1H2010 to RMB83.7 million in 1H2011
8
Retail Segment Review (1/2) Turnover (RMB million) 1000
+ 14.5% 838.8
800
732.4
Gross Profit (RMB million) 900 750 600
600
+ 16.6% 723.8 620.9
450 400
300
200
150
0
0 1H2010
1H2011
1H2010
1H2011
Retail segment grew by 14.5% in 1H2011 vs. 9.4% in 1H2010
Retail Network Repositioning Program has been concluded Success of the Program is reflected by solid financial performances from the newly opened stores 9
Retail Segment Review (2/2) Update on Group’s store count as at 30 June 2011 Store count has increased from 353 stores as at year end 2010, to 362 stores as at 30 June 2011 and is expected to resume growth for FY2011
Update on Price Strategy Average retail selling price increase of ~ 8% implemented for 2011 Fall Collection
Update on Licensed Brand Division Management is negotiating to acquire additional licensed brands, and is expected to grow this division continuously
10
OEM Segment Review Turnover (RMB million) 60 50
-11.8% 45.5 40.2
40 30 20 10 0 1H2010
Gross Profit (RMB million) 10 9 8 7 6 5 4 3 2 1 0
1H2011
6.3
-26.2% 4.7
1H2010
1H2011
OEM turnover fell by 11.8%, to RMB40.2 million Expect similar outlook in 2H2011
GP Margin at 11.6% (1H2010:13.9%) due to increased outsourcing costs from a more competitive retail market 11
Others Segment Review Turnover (RMB million) 18.8
18
8
71.1%
15 12
Gross Profit (RMB million)
6
29.4% 4.4
11.0
4
9 6
3.4
2
3 0
0 1H2010
1H2011
1H2010
1H2011
Others turnover increased by 71.1%, to RMB18.8 million Expect to fall in 2H2011
GP Margin for the Others Segment declined to 23.5% (1H2010: 30.9%) due to the increased cost of labour and raw materials 12
Strategy And Outlook (1/2) Management is confident that the core PORTS store network and brand are positioned to continue to build on its strong base of growing popularity within the PRC market New store opening plan for 2011 on track Consumer acceptance on price increase for Fall/ Winter 2011 Internal management profitability target for % Gross Margin, % Operation Margin & % Profit Attributable to Shareholders on track
Management’s long term vision is to build PORTS as a global iconic fashion brand with strong presence in Asia Pacific & overseas. Foundation steps towards the goal have already begun: Set up New York design & sales office for Womenswear in 2009 and Milan design & sales office for Menswear in 2011 Directly operated flagship boutiques opened in New York, London, Los Angeles, Montreal, Toronto, Vancouver & Paris (coming soon) and distribution of PORTS merchanise through wholesales channel to Nordstroms, Bloomingdales, etc.
13
Strategy And Outlook (2/2) Success will only be determined in the long term but will be predicated on concrete and measureable steps taken in both Asia Pacific region and overseas: Acceptance by global fashion icons and trendsetters Acceptance by global fashion media Acceptance to secure appropriate store locations
Management feels that success in long term vision will both benefit and support the growth of the Group’s business in the Asia Pacific region
14
Paris Flagship Boutique - 251 Rue Saint-Honoré, Paris Mandarin Oriental, Paris
Paris flagship boutique is expected to be unveiled during Fall 2011 The boutique is 528 sq. m and designed by renowned architect, Winka Dubbeldam, who also designed our London boutique
15
PORTS Uomo Milan Showroom – Milano, Italy
16
New Headquarter - Xiamen
The Group moved into the new headquarter facility during July 2011 Management believes that the consolidation of the Group's Xiamen headquarter operations into one single building, from six cluster buildings around the same area, will improve productivity and increase manufacturing capacity This will support the Group's future growth and enable it to reap the benefits from improved economies of scale
17
Industry Recognition (1/2)
Ports 1961 was awarded the 2011 Best Craftsmanship Award of the Year by Marie Claire in the annual fashion event held by Marie Claire Style China The award winning creation was a leather gown that combined the brand's flair for fashion with Chinese traditional papercutting art Participants in the event include other luxury brands such as Chanel, Louis Vuitton, Gucci and Dior
18
Industry Recognition (2/2)
Ports 1961 Menswear Spring/ Summer 2012 collection was launched during the Milan Fashion Week in June 2011 Attracted global media coverage such as major menswear fashion media like Vogue, Style.com & Gentlemen's Quarterly (GQ)
The Ports 1961 menswear is being launched in international fashion media Such as L' Uomo Vogue, the Italian version of Vogue Hommes & Fantastic Man, one of Europe's best fashion foward fashion magazine
19
Media Recognition (1/3)
Michelle Obama in Ports 1961
Kelly Preston in Ports 1961
Arianna Huffington in Ports 1961
20
Media Recognition (2/3)
Olivia Palermo & Gao Yuanyuan in Ports 1961 at New York fashion show
Li Bingbing wears Ports 1961 for the fashion spreads of Trendshealth
Zhang Yuqi in Ports 1961 for the conference of movie Qian Xuesen
21
Media Recognition (3/3)
Huang Haibo in PORTS attending ELLEMEN‘s party
Wu Xiubo in PORTS for Bizmode's fashion editorial feature
Tang Zhenye in PORTS suit for L'officiel Hommes
22
Contact Us For further information, please contact: Winnie Chin Head of Investor Relations +852-2506-0138 [email protected] Alfred Pow Assistant VP, Corporate Development +852-2506-0878 [email protected]
This document may contain time-sensitive information which is only current as of the date of publication. In addition, this document may also contain “forward looking statements” which are subject to risks and uncertainties. No reliance may be placed on the information contained in this document or on its completeness, accuracy or fairness, nor is any responsibility accepted for any errors, misstatements, or omissions or any direct or consequential loss howsoever arising from any use of, or reliance on, this document or otherwise in connection with it. Please refer to the Company’s latest issued annual or interim report for detailed financials.
Agenda Results Highlights Retail Segment Review OEM Segment Review Others Segment Review Strategy And Outlook
1
Results Highlights Turnover up 13.8%, to RMB897.7 million Retail: SSSG at ~ 14% and accounting for 93.4% of the Group’s turnover Gross Profit up by 16.2%, to RMB732.9 million Gross Profit Margin at 81.6% (1H2010: 79.9%) Profit From Operations up by 25.8%, to RMB 286.0 million due to greater contribution from Retail segment Operating Margin at 31.9% (1H2010: 28.8%) Profit Before Tax increased by 26.6%, to RMB 297.6 million Net Profit up by 2.7%, to RMB213.8 million
2
Results Highlights Net Profit Margin at 23.8% (1H2010: 26.4%) due to higher effective tax rate Earnings Per Share: RMB0.37 (1H2010:RMB0.37) Proposed Interim Dividend of RMB0.25 per share Strong Financial Position with RMB1.08 billion in cash, cash equivalents, time deposits and pledged bank deposits with banks (FY2010: RMB1.01 billion, 1H2010: RMB1.01 billion) Gross Profit and Gross Profit Margin achieved new heights during the first half of 2011, indicating a continuous strong market leader in the high end retail industry in China Dividends proposed after the balance sheet date: RMB142.2 million, vs. RMB141.5 million on the same period in 2010 3
Results Highlights Turnover (RMB million) 1000
898
900 800 700 600
789
731
693 578
Retail: OEM:
500
Others:
400 300 200 100 0 1H2007
1H2008
1H2009
1H2010
1H2011
Segment turnover as a percentage of Group turnover (%) 1H2007
1H2008
1H2009
1H2010
1H2011
Retail
81.6
87.7
91.6
92.8
93.4
OEM
12.3
7.3
4.9
5.8
4.5
6.1
5.0
3.5
1.4
2.1
Others
4
Results Highlights Gross Profit (RMB million) 733
800 700
534
600 500
631
596
414
Retail:
400
OEM:
300
Others:
200 100 0 1H2007
1H2008
1H2009
1H2010
1H2011
Gross Profit Margin (%) 1H2007
1H2008
1H2009
1H2010
1H2011
Retail
81.5
84.1
86.2
84.8
86.3
OEM
14.9
12.8
20.1
13.9
11.6
Others
53.6
46.7
45.0
30.9
23.5
Group
71.6
77.1
81.5
79.9
81.6 5
Other Revenue Other Revenue increased significantly by 420.1%, from RMB9.7 million to RMB50.2 million, due to an increase in other operating income The company received unconditional cash grant from Xiamen Government Royalty income increased by 35.3%, from RMB3.1 million to RMB4.2 million due to the PORTS strong brand equity Design and decoration income declined due to increases in the store construction cost
RMB million
1H2010
1H2011
% Change
Other revenue
9.7
50.2
420.1%
Royalty income
3.1
4.2
35.3%
Design & decoration income
4.5
4.0
-11.6%
6
Other Operating Expenses Operating expenses rose by 20.4%, from RMB 413.0 million in 1H2010 to RMB497.0 million in 1H2011 Distribution costs rose by 23.7% due to increases in rental payments, salaries and benefits, depreciation and advertising costs Administrative expenses declined by 5.8%, mainly due to greater economies of scale Other operating expenses rose by 18.6%, mainly due to the impact from the increase in stock provision
RMB million
1H2010
1H2011
% Change
Distribution costs
345.6
427.6
23.7%
Administrative costs
43.0
40.5
-5.8%
Other operating costs
24.4
29.0
18.6% 7
Results Highlights Net Finance Income rose from RMB7.8 million in 1H2010 to RMB11.5 million in 1H2011, an increase of 47.8%, was mainly related to the HK$ loan, which caused a net finance income gain due to the strengthening of the RMB Effective Income Tax Rate rose from 11.5% in 1H2010 to 28.1%, due to the application of unified income tax rate of 25%, plus the withholding tax on the remittance of dividends to our shareholders. The Group's income tax expense grew by 210.5%, from RMB27.0 million in 1H2010 to RMB83.7 million in 1H2011
8
Retail Segment Review (1/2) Turnover (RMB million) 1000
+ 14.5% 838.8
800
732.4
Gross Profit (RMB million) 900 750 600
600
+ 16.6% 723.8 620.9
450 400
300
200
150
0
0 1H2010
1H2011
1H2010
1H2011
Retail segment grew by 14.5% in 1H2011 vs. 9.4% in 1H2010
Retail Network Repositioning Program has been concluded Success of the Program is reflected by solid financial performances from the newly opened stores 9
Retail Segment Review (2/2) Update on Group’s store count as at 30 June 2011 Store count has increased from 353 stores as at year end 2010, to 362 stores as at 30 June 2011 and is expected to resume growth for FY2011
Update on Price Strategy Average retail selling price increase of ~ 8% implemented for 2011 Fall Collection
Update on Licensed Brand Division Management is negotiating to acquire additional licensed brands, and is expected to grow this division continuously
10
OEM Segment Review Turnover (RMB million) 60 50
-11.8% 45.5 40.2
40 30 20 10 0 1H2010
Gross Profit (RMB million) 10 9 8 7 6 5 4 3 2 1 0
1H2011
6.3
-26.2% 4.7
1H2010
1H2011
OEM turnover fell by 11.8%, to RMB40.2 million Expect similar outlook in 2H2011
GP Margin at 11.6% (1H2010:13.9%) due to increased outsourcing costs from a more competitive retail market 11
Others Segment Review Turnover (RMB million) 18.8
18
8
71.1%
15 12
Gross Profit (RMB million)
6
29.4% 4.4
11.0
4
9 6
3.4
2
3 0
0 1H2010
1H2011
1H2010
1H2011
Others turnover increased by 71.1%, to RMB18.8 million Expect to fall in 2H2011
GP Margin for the Others Segment declined to 23.5% (1H2010: 30.9%) due to the increased cost of labour and raw materials 12
Strategy And Outlook (1/2) Management is confident that the core PORTS store network and brand are positioned to continue to build on its strong base of growing popularity within the PRC market New store opening plan for 2011 on track Consumer acceptance on price increase for Fall/ Winter 2011 Internal management profitability target for % Gross Margin, % Operation Margin & % Profit Attributable to Shareholders on track
Management’s long term vision is to build PORTS as a global iconic fashion brand with strong presence in Asia Pacific & overseas. Foundation steps towards the goal have already begun: Set up New York design & sales office for Womenswear in 2009 and Milan design & sales office for Menswear in 2011 Directly operated flagship boutiques opened in New York, London, Los Angeles, Montreal, Toronto, Vancouver & Paris (coming soon) and distribution of PORTS merchanise through wholesales channel to Nordstroms, Bloomingdales, etc.
13
Strategy And Outlook (2/2) Success will only be determined in the long term but will be predicated on concrete and measureable steps taken in both Asia Pacific region and overseas: Acceptance by global fashion icons and trendsetters Acceptance by global fashion media Acceptance to secure appropriate store locations
Management feels that success in long term vision will both benefit and support the growth of the Group’s business in the Asia Pacific region
14
Paris Flagship Boutique - 251 Rue Saint-Honoré, Paris Mandarin Oriental, Paris
Paris flagship boutique is expected to be unveiled during Fall 2011 The boutique is 528 sq. m and designed by renowned architect, Winka Dubbeldam, who also designed our London boutique
15
PORTS Uomo Milan Showroom – Milano, Italy
16
New Headquarter - Xiamen
The Group moved into the new headquarter facility during July 2011 Management believes that the consolidation of the Group's Xiamen headquarter operations into one single building, from six cluster buildings around the same area, will improve productivity and increase manufacturing capacity This will support the Group's future growth and enable it to reap the benefits from improved economies of scale
17
Industry Recognition (1/2)
Ports 1961 was awarded the 2011 Best Craftsmanship Award of the Year by Marie Claire in the annual fashion event held by Marie Claire Style China The award winning creation was a leather gown that combined the brand's flair for fashion with Chinese traditional papercutting art Participants in the event include other luxury brands such as Chanel, Louis Vuitton, Gucci and Dior
18
Industry Recognition (2/2)
Ports 1961 Menswear Spring/ Summer 2012 collection was launched during the Milan Fashion Week in June 2011 Attracted global media coverage such as major menswear fashion media like Vogue, Style.com & Gentlemen's Quarterly (GQ)
The Ports 1961 menswear is being launched in international fashion media Such as L' Uomo Vogue, the Italian version of Vogue Hommes & Fantastic Man, one of Europe's best fashion foward fashion magazine
19
Media Recognition (1/3)
Michelle Obama in Ports 1961
Kelly Preston in Ports 1961
Arianna Huffington in Ports 1961
20
Media Recognition (2/3)
Olivia Palermo & Gao Yuanyuan in Ports 1961 at New York fashion show
Li Bingbing wears Ports 1961 for the fashion spreads of Trendshealth
Zhang Yuqi in Ports 1961 for the conference of movie Qian Xuesen
21
Media Recognition (3/3)
Huang Haibo in PORTS attending ELLEMEN‘s party
Wu Xiubo in PORTS for Bizmode's fashion editorial feature
Tang Zhenye in PORTS suit for L'officiel Hommes
22
Contact Us For further information, please contact: Winnie Chin Head of Investor Relations +852-2506-0138 [email protected] Alfred Pow Assistant VP, Corporate Development +852-2506-0878 [email protected]
