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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Naibu Global | LSE:NBU | London | Ordinary Share | JE00B648L531 | ORD NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 11.50 | 0.00 | 00:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Jan 2020 to Jan 2025
TIDMNBU
RNS Number : 5351G
Naibu Global International Co PLC
08 May 2014
Press Release 8 May 2014
Naibu Global International Company Plc
("Naibu", the "Company" or the "Group")
Unaudited Preliminary Results
Naibu Global International Company Plc(AIM:NBU), a leading Chinese manufacturer and supplier of branded sportswear, today announces its unaudited preliminary results for year ended 31 December 2013.
Highlights
Hot Features
Premium
Revenues increased by 15% to a new record of RMB 1,928 million
-- (2012: RMB 1,677 million)
Profit before tax rose 15.7% to RMB 417 million (2012: RMB
-- 360 million)
Earnings per share for the year of RMB 5.54 (2011: RMB 4.94)
--
Final dividend of 4 pence per share declared (2012: 4 pence).
-- Scrip dividend alternative to shareholders who wish to reinvest
Operating margin remained steady at 21.6% (2012: 21.5%)
--
Strong Group balance sheet with cash position of RMB 468
-- million (2012: 453 million). The Group has no outstanding
bank loans or overdue debt
The number of Naibu branded outlets increased by 4.9% during
-- the year to 3,188 stores (2012: 3,040 stores)
The sale of clothes and accessories rose 1.2% representing
-- 46.4% of total revenues
Increased Naibu-branded product range to 556 items in 2013
-- (2012: 414)
R&D expenditure reduced by 5.1% to RMB 25.9 million (2012:
-- RMB 27.3 million)
The illustrative exchange rate as at 7 May 2014 is 1 GBP: 10.45 RMB
Commenting on the unaudited preliminary results, Huoyan Lin, Executive Chairman of Naibu, said:
"The Board is pleased to announce another strong set of results, which show significant growth in revenue and profit before tax. The Group's strategy of focusing on third and fourth tier cities has continued to drive growth during the period, as these cities expand as a result of ongoing urbanisation in China.
"The Naibu brand now enjoys a strong market position within this targeted demographic, and the Group's increased investment in marketing initiatives, such as the sponsoring of sporting events, will assist in strengthening the brand further. Against the backdrop of the Chinese government's focus on increasing domestic consumption and encouraging urbanisation, the Board has confidence in the future of the sportswear industry and the Group's growth potential within the market."
- Ends -
For further information:
Naibu Global International Company
Plc
Huoyan Lin, Executive Chairman Tel: +44 (0) 20 7398
7702
Li Zhen, Chief Financial Officer www.naibu.com
Daniel Stewart & Company Plc Tel: +44 (0) 20 7776
6550
Paul Shackleton / Martin Lampshire www.danielstewart.co.uk
Media enquiries:
Abchurch
Henry Harrison-Topham / Quincy Allan Tel: +44 (0) 20 7398
7702
henry.ht@abchurch-group.com www.abchurch-group.com
Chairman's Statement
On behalf of the Board, I am pleased to present our annual results for the Group for the year ended 31 December 2013.
Naibu has continued to achieve excellent sales growth and profitability, despite China's sportswear industry experiencing intense competition during 2013. In the period, Group revenues increased by 15.0% to RMB 1,928million, with operating profit growing by 16.3% to a record RMB 419 million and a net profit margin of 16.1% being achieved.
During 2013, Naibu has continued to reinforce its brand position by differentiating the Group from itspeers through positioning Naibu as an affordable leading fashion sportswear brand. The Group has continued with focusing its sales and marketing efforts on China's third and fourth tier cities, benefiting from China's continued drive towards urbanisation, a fundamental driver of growth for Naibu's industry. However, competition is likely to intensify in Naibu's markets in 2014 as other branded sportswear companies continue their push into tier 3 and tier 4 cities.
In the light of this and to further strengthen the competitiveness of the Group's distribution channels, the Group has stepped up its effort in monitoring its sales network and providing guidance and training to its distributors' retail channels and thereby reinforcing operational management. The Group has also adopted a more prudent approach in assessing its plan for opening new stores focusing on organic growth with second-to-fourth-tier cities remaining the focus for development. The Group plans to expand its market in Western China and consolidate its presence in Northern, Eastern and Southern China to further optimise its nationwide network.
With regard to Naibu's manufacturing operations, production efficiency continues to be a key area of focus to achieve margin improvement. Operations at the Group's new Quangang plant have not yet commenced as planned; this is due to an unexpected shortage of labour which has driven labour costs upwards. However, the Group is taking various measures to recruit workers and is hopeful that it will be able to commence manufacturing in the summer. If sufficient number of workers cannot be recruited for at least six production lines to begin production by August 2014, the Company will then consider a number of alternative options, one of which may include the decision to abandon the commencement of production at Quangang and to dispose of the Quangang factory. In the meantime, the Company will continue to produce shoes at its Jinjiang facility, and the majority of shoe production will have to be out-sourced to OEM suppliers until the Dazhu factory becomes operational. Naibu has and continues to maintain extremely good relationships with a number of OEM suppliers and consequently does not anticipate that there will be any change in flexibility or disruption to supply.
Naibu is also continuing with its expansionstrategy of investing into Central and Western China, which are the two regions that the Board considers to have the greatest potential for consumer growth. The Group has now purchased the landuse rights for a new factory to include twelve production linesin Dazhu County, Sichuan Province. The land is in the process of being prepared for construction to commence by local government and this is expected to be finished by July 2014. The Board believes the Dazhu factory is on track to be operational in early 2016.
In terms of R&D, to maintain Naibu's leading leisure sports marketing position and to build stronger brand equity, the Group will further strengthen its product portfolio to satisfy a range of consumer needs.
The Group continues to improve management systems and develop a strong corporate culture to attract talented staff. Naibu continues to offer additional staff training and promotion opportunities so as to help the Company's employees develop professionally as the business expands.
The Board will take further action and measures to ensure the steady development of the Group's business, working closely with our supply chain partners and distributors in order to create value for our stakeholders.
I would like to thank my fellow Board members and all of our staff for their dedication, commitment and efforts over the past year.
On behalf of the Board, I would like to express my heartfelt gratitude to our shareholders for their continued support and trust they place in us. Given the performance and capital requirements of our business, I am delighted to announce that the Group proposes to maintain its dividend and pay a final dividend of 4 pence per share to our shareholders. The dividend is subject to shareholder approval and the appropriate approvals of the Chinese authorities. The final dividend of 4 pence per share is expected to be paid on 15 August 2014to shareholders on the register at the close of business on 4 July 2014. The shares will trade ex-dividend on 2 July 2014 following approval at the AGM. The Company is proposing to operate a Scrip Dividend Alternative. The Scrip Dividend Alternative provides shareholders with an opportunity to invest the whole of, or part of, the cash dividend they receive to buy further shares in the Company without incurring stamp duty or dealing expenses.
The Scrip reference price is calculated by taking the average of the middle market quotations for the Company's Ordinary shares for the day on which they are quoted ex-dividend and the four subsequent business days. The Scrip Dividend Alternative will be subject to shareholder approval at the Annual General Meeting.
Naibu continues to have a strong position in the market and the Board remains confident of Naibu's future growth and prospects.
Huoyan Lin
Executive Chairman
7 May 2014
Operational Review
Financials
2013produced another set of solidresults for Naibu, with pre-tax profits rising 15.7% to RMB 417 million (2012: RMB 360 million) on record sales of RMB 1,928million up 15.0% on the prior year (2012: 1,677 million).
This strong increase reflected growing popularity and rising demand forbranded leisurewear, sportswear and equipment in Naibu's target Chinese market. This consumer led demand was met by the Group over the course of the year through a broadening of Naibu's product range through, and its continued investment in, research and development (\"R&D") and advertising, sales and distribution.
Product range and sales
During the year, Naibu made significant progress in terms of brand positioning, product design and marketing.
Throughout the year, the Group continued with the manufacture of Naibu-branded leisure and sports shoes, which were sold through its nationwide Naibu outlets alongside Naibu-branded leisurewear, sportswear, sports accessories and equipment sourced from original equipment manufacturer ("OEM") suppliers. In all, the Group offered a total of 556 Naibu-branded products in 2013 (2012: 414) including 197 types of shoes, 303types of clothing, and 56types of accessories and sports equipment. Salesand marketing of these items remained focused on mass-market buyers and, in particular, young, innovative consumers aged between 12 and 35, under the Company's three separate product lines: "Vital Campus", "Urban Business" and "Holiday Leisure".
The sale of shoes amounted to RMB 1,033 million, up 12.4% from the previous year, and continued to account for most of the Group's sales, representing 53.6% of total revenue. Increased sales price per unit, rather than sales volume, accounted for over halfof the total sales increase.
Strong revenue growth was also achieved from the sale of clothes and accessories, which together accounted for the remaining 46.4% of total revenues, up 1.2% from 45.2% in 2012. This was achieved primarily through increasing the number of Naibu-branded outletsby 4.9% during the year from 3,040stores in 2012 to 3,188stores in 2013, increasing the display area for clothes and accessories, and focusing on higher-margin products.
Sales have also benefited from the introduction of higher-quality in-store sales teams. The Group has continued to provide both training to staff at Naibu branded stores on how to constantly improve services, exhibit the various series of accessories and also providing rigorous guidance to in-store sales teams. In addition, the increase in unit price for each category contributed significantly to revenue growth for the Group.
Research and development
During the year, Naibu continued tostrengthen its design and product development capacity and capability, as stronger brand identity and innovation capabilities will makeNaibu products more desirable to consumers, which will in turn generate higher sales revenue for Naibu's distributors and boost their confidence in the Group.
The Group has maintained a strong R&D team of 93 employees who are responsible for the design of all shoes and clothing. The R&D team comprises three divisions respectively covering product design, product development and technology development. It creates two seasonal collections each year ("Spring and Summer" and "Autumn and Winter") which during 2013included 556 new product designs which were successfully launched at two seasonal fairs. Naibu's distributors remained crucial to the R&D process during the year, providing market feedback and opinions on forward sales potential. The Group is constantly striving to offer value-added quality products at affordable prices for its target customers. The R&D department plans to launch over 560new Naibu products in 2014.
Innovation is the key to Naibu's success. The Group is developing a new brand, "NIBO", based on a European fashion concept and this new brand is targeted to be launched in 2015. In addition to this, the Group has incorporated up to date designs into its apparel products in response to its consumers' increasingly sophisticated tastes.
During the year, R&D expenditure amounted to RMB 25.9 million or 1.3% (2012: 1.6%) as a proportion of Group. Naibu will further strengthen investment in R&D in the future.
Manufacturing
Naibu's production centers werelocated in Jinjiang and Shishi, both in Fujian Province, where the Group leasedtwo purpose-built production facilities operating a total of eight shoe production lines - four at each plant where workers are engaged in stamping, sewing and stitching, and moulding. The lease on the Shishi plant expired at the end of 2013 and the Company vacated the site. The four relatively old lines at Jinjiang ceased production and were replaced with two lines previously at Shishi.
The Group also completed the acquisition of its new plant in Quangang and transferred the remaining two lines previously installed at Shishi, to Quangang where they have now been installed. However, operations at the Group's new Quangang plant have not yet commenced as planned due to an unexpected shortage of labour which has driven the cost of labour upwards. After the Chinese New Year holiday, many workers did not return to the coastal cities to work but chose to stay in their hometowns, as many central and western provinces persuaded their workers to stay and work through various preferential job and welfare policies. Naibu is taking various measures to recruit enough workers and is hopeful that it will be able to commence manufacturing in the summer. If a sufficient number of workers cannot be recruited so that at least six production lines can begin production by August, the Group will then consider a number of alternative options, one of which may include the decision to abandon the commencement of production at Quangang and subsequently, to dispose of the Quangang factory. In the meantime, Naibu will continue to produce shoes at its Jinjiang facility, whilst the majority of shoe production will have to be outsourced to OEM suppliers until the Dazhu factory becomes operational. Naibu has and continues to maintain extremely good relationships with a number of OEM suppliers and has made arrangements with its OEM suppliers such that should production at Quangang not commence, there will not be any disruption to production and any impact on the Company's results will be minimal.
As previously announced, the Group has entered into an agreement with the People's Government of Dazhu County in Sichuan Province to purchase land use rights, for 13.3 hectares of land, to develop a Naibu Industrial Zone. The Naibu Industrial Zone will include R&D, manufacturing and logistic facilities relating to the development of shoes, apparel, sports equipment, outdoor exercise goods and other sporting goods. It is anticipated that the Naibu Industrial Zone will include other relevant upstream and downstream industries in the supply chain for such goods.
The Group will pay RMB 60 million for the land use rights, of which RMB 8 million has already been paid as a deposit. It is anticipated that the total cost of investment for the project will be RMB 300 million. A new factory with an additional 12 production lines will be built and is expected to be fully operational by early 2016.
At the year-end, the Group employed 1,777 production staff (1,949 in 2012). 54.2% of the shoes sold and distributed by the Group during the year were produced by the Group at its manufacturing plants. The balance of shoes delivered, and all the Group's clothes and accessories were sourced from OEM suppliers.
The Board believes that the change of production facilities will allow it to respond with greater flexibility to market changes whilst providing the Group with enhanced control over the production process.
Sales and distribution
The Group continued to strengthen its management of sales and distribution during the course of the year, and now has a team of 70 staff responsible for product promotion and sales. Six regional sales managers were in charge of individual geographic areas across Naibu's established Chinese distribution network, communicating regularly with key customers, and monitoring consumer trends and competitor performance.
The Group adopts a distributor model that is prevalent in the sportswear industry in China. Under this model, the Group sells products exclusively to its distributors at a uniform discount to the suggested retail price. The distributors in turn sell these products to their sub-distributors or authorised retailers at a price that is at a discount (within 60%) to the suggested retail price that has been approved by the Company. The authorised retailers then sell the Group's products to consumers in authorised retail outlets. The Board considers this model has the benefit of enabling the business to grow by leveraging the resources of its distributors, their expertise in retail distribution and management, and their local relationships. It also enables the Group to focus on designing and developing new and innovative leisure sportswear products, to dedicate resources to developing the brand and marketing its products. The Group's distribution agreements with its distributors are reviewed on an annual basis.
All of the Group's sales were made through distribution agreements with 25 independent corporate and individual retail distributors across China. These distributors are prohibited from distributing or selling any products that compete with Naibu products. At 31 December 2013, there were 3,188 Naibu-branded stores and sales outletsoperated by our distributors, in 21 provinces and three municipalities. This represented an increase of 148outlets over the number at the end of 2012, most of them in third and fourthtier cities in China. Some stores were directly owned by the distributors, with most of the others owned by their sub-distributors some of whom also operated sales outlets in department stores and supermarkets. Our distributors are responsible for making their own delivery arrangements with the risk of loss of or damage to products during transport being borne by the distributors. Distributors will only be able to return goods sold to them where there are issues relating to quality. No goods were returned during the year ended 31 December 2013. In addition, distributors are only allowed to use the Group's intellectual property in connection with the sale of Naibu products and they are prohibited from participating in or assisting any activities that may infringe upon Naibu's intellectual property rights.
To protect Naibu's brand image and to promote high standards of service quality, the Group continued to provide retail distributors with guidance on how products should be best presented and marketed. Distributors are required to comply with the Group's sales policies, to adhere to our pricing policies, and to adopt our standardised outlet design and layout in authorised retail outlets. New store locations continue to be selected jointly by distributors and the Group, and the selections are based on market research, estimated costs and local sales potential.
In 2013, Northern, Eastern and Southern China remained Naibu's key markets with total revenues from thesethree regions accounting for 67.0% and 65.9% during the years 2012 and 2013 respectively. However, the Group continues to strengthen its sales in Central and Western China, as the rapid growth in disposable income in these regions will provide Naibu with strong sales potential in the near future.
Marketing
Naibu continued to invest significantly in brand marketing and product promotion during the year, spending RMB 30.2million (2012: RMB 29.5 million) in advertising. The Group maintained its effort in building its brand and on marketing in order to differentiate itself from its peers and consolidate its foothold on the market. This was especially important as industry players could not rely on sales volume for growth amid the market glut. In addition, the marketing function was supported by "front-line" information on consumer and competitor trends supplied by the Group's team of regional sales managers.
The marketing and sales teams analyse retail data and share market information on a timely basis with distributors. The Group also endeavours to keep its retailers competitive by offering comprehensive training and guidance for store openings and ordering plans. In order to help network partners reduce their operating cost pressures, the Group granted subsidies to distributors for the renovation of store outlets at the end of 2012 to standardise store layout and improve brand image. This has benefited sales through offering a refreshing new shopping experience for customers.
During the year, the Group also sponsored local sports events and activities, such as the "Outlook Cup" annual invitational golf tournament that took place in Fujian Province, to highlight the Naibu brand.
Employees and emoluments
As at 31 December2013, the Group employed a total of 1,989(2012: 2,310) full time employees in the PRC which included management and administrative staff, R&D staff, salespersons and workers. The reduction in staff numbers compared with the year end 2012 was due to the factory relocation. In November 2013, the lease of the Shishi plant expired and the Group closed the Shishi factory with the intention of moving to the newly acquired Quangang plant. Some of the employees chose not to move, and they agreed to terminate their labour contracts with the Group. The Group is now in the process of hiring new skilled workers locally in Quangang. However, due to labour cost pressures, this is taking longer than anticipated.
For the year ended 31 December 2013, the Group's total remuneration of employees (including non-executive directors) was RMB 105.8million, representing 5.5% of the turnover of the Group(2012: 6.2%). The Group's emolument policies, based on the performance of individual employees, are formulated to attract talent and retain quality staff. Discretionary bonuses are awarded to employees according to individual performance. The Group believes its strength lies in the quality of its employees and has placed a great deal of emphasis on benefits offered to employees.
Outlook
Against the backdrop of the Chinese government's determination to restructure its economy by encouraging domestic consumption and to continue the process of urbanisation, the sportswear industry has good growth potential in the coming years. The Group is optimistic about the future development of the sportswear industry. However, competition is likely to intensify in Naibu's markets in 2014 as other branded sportswear companies continue their push into tier 3 and tier 4 cities. Given these challenges, the Group will continue to use its competitive edge to seize every market opportunity. Naibu will also enhance its execution capabilities at all levels to gain market share and prudently mitigate future business risks. Achieving sustainable business growth and creating value for stakeholders in the long term are objectives that the Board continues to focus on.
Financial review
Key financials
2013 (RMB) 2012 (RMB)
-------------- --------------
Revenue 1,928 million 1,677 million
Profit before tax 417 million 360 million
Earnings per share (basic) 5.54 4.94
Cash generated from operations 217 million 147 million
Proposed final dividend 4 pence 4 pence
per share
Revenue
Naibu's revenue increased by 15.0% during the year, rising to a record RMB 1,928 million thanks to increases in unit prices, a successful broadening of Naibu's product range and a steady expansion of the Group's distribution network.
In 2013, shoes were still the greatest revenue contributor while revenue derived from Naibu's higher margin branded clothing and accessories linescontinued to increase as a proportion of total sales.
While sales in the Group's principal markets of North, East and South China accounted for 65.9% of total revenues in 2013, a slight fall of 1.1%from 67.0% in 2012, this reflected the Group's progress in building its distribution channels in SouthWest and Central China.
Category Year to % of Year to % of %
31 December turnover 31 December turnover increase
2013 2012
(RMB, 000) (RMB, 000)
------------- ---------- ------------- ---------- ----------
Shoes 1,033,431 53.6% 919,271 54.8% 12.4%
Clothing 828,789 43.0% 706,457 42.1% 17.3%
Accessories 65,747 3.4% 50,885 3.1% 29.2%
------------- ---------- ------------- ---------- ----------
Total 1,927,967 100.0% 1,676,613 100.0% 15.0%
------------- ---------- ------------- ---------- ----------
Area Year to 31 December Year to 31 December
2013 2012
--------
RMB,000 % of RMB,000 % of %
turnover turnover change
---------- ---------- ---------- ---------- --------
North China 494,647 25.7% 447,534 26.7% 10.5%
East China 454,416 23.6% 390,076 23.3% 16.5%
South
China 321,051 16.7% 285,298 17.0% 12.5%
Central China 238,246 12.3% 195,537 11.7% 21.8%
North-West
China 172,895 9.0% 151,890 9.0% 13.8%
South-West
China 246,712 12.7% 206,278 12.3% 19.6%
---------- ---------- ---------- ---------- --------
Total 1,927,967 100.0% 1,676,613 100.0% 15.0%
---------- ---------- ---------- ---------- --------
Cost of sales
Cost of sales of the Group for the year 2013 increased by 15.3% year on year to RMB 1,392million, which is in line with revenue growth.
Year to 31 December 2013 Year to 31 December %
2012 change
Operating Cost % sales Operating % sales
(RMB,000) cost Cost cost
(RMB,000)
Group Manufacturing (Shoes)
Raw material 277,822 20.0% 304,096 25.2% -8.6%
Direct Wages 87,931 6.3% 97,483 8.1% -9.8%
Indirect costs 46,878 3.4% 45,943 3.8% 2.0%
Subtotal 412,631 29.6% 447,522 37.1% -7.8%
OEM Supplies
Shoes 348,534 25.0% 230,400 19.0% 51.3%
Clothing 587,305 42.2% 494,800 41.0% 18.7%
Accessories 44,013 3.2% 34,502 2.9% 27.6%
Subtotal 979,852 70.4% 759,702 62.9% 29.0%
----------------- -------- ------------ -------- --------
Total 1,392,483 100.0% 1,207,224 100.0% 15.3%
----------------- -------- ------------ -------- --------
During the year, the percentage of OEM supplies increased
significantly compared with the previous year, a result
of internal production capacity constraints.
The Group spent RMB 25.9 million on R&D during the year,
a fall of 5.1% from RMB 27.3 million in 2012, with R&D expenditure
accounting for 1.3% of Group turnover (2012: 1.6%). The
reduction in R&D expense was mainly due to reduced material
consumption of around RMB 2.0 million in the R&D process
as a result of improved efficiency. The Group will continue
to increase investment in R&D to further improve product
quality and adapt to consumer preferences.
Gross profit
The overall gross profit margin was 27.8% during 2013, down
from 28.0% compared with the year 2012. Whilst, the gross
profit margin for accessories increased from 32.2% to 33.1%
compared with the previous year, the gross profit margin
for shoes increased slightly by 0.1%, while the gross profit
margin of clothing fell by 0.9% during the year.
The reduction in gross profit margin was mainly due to two
reasons: the first was the increased delivery of shoe products
during the year with shoes having a lower gross profit margin
than the other two product categories; and the second was
the increase in OEM costs for clothing during the year,
mainly a result of cost pressures in the industry. In addition,
as mentioned above, the percentage of self-produced shoes
was less than in the prior year. This situation will be
alleviated once the Group expands its production facilities
to meet the strong market demand which will also lead to
further margin improvement.
Category 2013 2012
Gross Gross
profit Gross profit gross
profit profit
margin margin
RMB ,000 % RMB ,000 %
--------- -------- --------- --------
Shoes 272,265 26.4% 241,350 26.3%
Clothing 241,483 29.1% 211,657 30.0%
Accessories 21,735 33.1% 16,382 32.2%
--------- -------- --------- --------
Total 535,483 27.8% 469,389 28.0%
--------- -------- --------- --------
Other income
Other income includes interest income and material disposal
income of the Group. During the year, interest income was
RMB 1.7 million, and material disposal income was RMB 0.3
million.
Selling and distribution expenses
Selling and distribution expenses increased by 14.4% to
RMB 90.4 million during the year, primarily as a result
of an increase in amortisation expenses related to the store
decoration subsidy for distributors' retail outlets.
At the end of 2012, the Group granted subsidies of RMB 54
million to distributors for the renovation of store outlets.
These stores were mostly opened before 2009 and are therefore
relatively old. In order to standardise store layout, and
to improve the brand image and profile of the Group as a
listed company, the Group decided to grant a renovation
subsidy to distributors for store refurbishment. The distributors
have signed three year contracts to keep these Naibu branded
shops open and the Group believes that the provision of
such a subsidy has been of direct assistance in upgrading
the retail stores and improving its competitive advantage
in the market. The amount of amortisation expenses for the
store decoration subsidy during the year was RMB 24.4 million
(2012: RMB 8.7 million).
Advertising and marketing expenses increased by 2.4% year-on-year
to RMB 30.2 million (2012: RMB 29.5 million). Advertising
and marketing expenses as a percentage of turnover was 1.6%
(2012: 1.8%), and the Group will continue to consolidate
brand image and strengthen market awareness in order to
further increase market share.
Administrative expenses
Administrative expenses fell by 8.9% to RMB 29.0 million
for the year ended 31 December 2013 (2012: RMB 31.9 million),
a result of effective cost management and partly due to
the higher IPO related expenses during the year ended 31
December 2012.
Labour as a percentage of turnover decreased by 0.7% in
the year, primarily as a result of the termination of labour
contracts due to relocation of plant facilities.
Year ended 31 December
2013 (%) 2012 (%) Change (%)
Advertising expenditures
as proportion of
turnover 1.6% 1.8% -0.2%
Labor cost as proportion
of turnover 5.5% 6.2% -0.7%
R&D expenditure as
proportion of turnover 1.3% 1.6% -0.3%
Finance expenses
Finance expense during the year refers to foreign exchange losses. The Group incurred an exchange loss of RMB 0.9 million during the year, as a result of the depreciation of the Hong Kong Dollar. In 2012, the Group had a foreign exchange gain of RMB 0.4 million which was booked in the account of other income.
Income tax expense
During the year, income tax expenses for the Group amounted to RMB 109.3million (2012: RMB 95.3 million), including current income tax of RMB 107.6 million and deferred income tax of RMB 1.7 million. The current income tax charge for the yearended 31 December 2013 has been based on the standard corporate income tax rate of PRC 25%, being the same as2012.
Year ended
31 December
Item 2013 2012 Change
Profit margin before tax 21.6% 21.5% 0.1%
Impact of income tax expense on
net profit margins -5.6% -5.5% 0.1%
Impact of deferred tax on net profit
margins -0.09% -0.15% 0.06%
Net profit margins 16.0% 15.8% 0.2%
Deferred tax for the Group is a result of the tax treatment for dividend payments. Pursuant to prevailing PRC tax laws and regulations, dividends distributed to a foreign investor by Foreign Invested Enterprises ("FIE") in the PRC aresubject to a withholding tax of 5% to 10%. Deferred tax liabilities arising from such tax rules are recognised to the extent that the management intends to distribute dividends from retained earnings. The PRC corporate rules stipulate that FIE should provide 10% of the current year profit for the reserve fund, and the remaining 90% can be used for distribution to investors. In 2012 and 2013, the deferred tax calculation of the Group is based on 10% of the retained earnings which can be distributed to investors. Considering the profit before tax margin is about 22%, the normalised income tax expense level (including current tax and deferred tax) is around 6% of turnover, or about 35% of net profits.
Results for the year
Profit for year increased to RMB 307.8million, representing an increase of 16.1% year-on-year. Basic earnings per share for 2013 was RMB 5.54, an increase of 12.1% compared with the 2012 level. The net profit margin was 16.0% compared to 16.8% in 2012. This was a result of reduced gross profit margins and higher selling and distribution expenses compared with 2012.
Balance sheet and cash flow
As at 31 December 2013, the total assets of the Group stood at RMB 1,491 million, with current assets amounting to RMB 1,273million. Total liabilities were RMB 219 million and total shareholders' equity rose to RMB 1,273million. The Group has no outstanding bank loans or overdue debt.
Year ended 31 December
Category 2013 2012 Change
------- ------- -------
Asset-liability ratio 14.7% 17.0% -2.3%
Current ratio 609.4% 589.8% 19.6%
Proportion of current assets 85.4% 96.3% -10.9%
Proportion of shareholders'
equity 85.3% 83.0% 2.3%
The Group's year-end cash and cash equivalents amounted to RMB 468.3million, RMB15.4 million higher than the RMB 452.9million as at 31 December 2012. The Group's cash was mainly deposited with the Agriculture Bank of China, which is one of the four largest stated-owned banks in China. The effective interest rate for Renminbi current deposits during the year was 0.35%.
Year-ended 31 December
Category 2013 2012 Change
RMB'000 RMB'000 RMB'000
---------- ---------- ------------
Net cash inflow from
operations 217,254 146,958 70,296
Net cash outflow from
investments (195,102) (36,208) (158,894)
-In which: 1)Acquisition
of property, plant
and equipment (89,602) (17) (89,585)
2) Purchase of land
use rights (105,500) (105,500)
3) Renovation prepayments
for distributions - (36,191) 36,191
Net cash inflow/(outflow)
from financing activities (6,777) 55,355 (62,132)
In which: 1) Share
issue proceeds, net
of issue costs - 54,314 (54,314)
2) Dividend (9,946) - (9,946)
3) Advances from a
director / shareholder 3,169 1,041 2,128
---------- ---------- ------------
Total 15,375 166,105 (150,730)
---------- ---------- ------------
Working capital management
During the year the Group further consolidated its working capital management. The average working capital cycle for the yearended 31 December2013 was 91 days (2012: 95 days). This was mainly due to a reduction in both accounts receivable and trade payable days compared to a year ago.
Trade receivables rose by 21.2% to RMB624.5million as at 31 December2013 compared to 2012, although the average trade receivable turnover days fell to 106 days from 121 days in 2012. None of the trade debtors were considered impaired and 90% of trade debts were within 90 days. The Group believes that the support it provides to its distributors and retailers in running their stores network is important and it maintains close contacts with all the distributors and will continue to monitor all the debts. Therefore, the Group extends the payment terms to 120 days to certain of its clients.
The average inventory turnover cycle was 20 days for the yearended 31 December2013, a reduction from the 21 days seen in 2012, which reflects good stock control and management. Inventory amounted to RMB 91.6million, an increase of 41.4% when compared with the RMB 64.8 million at 31 December 2012, and which is in line with the business' scale and sales growth for the year under review.
The average trade payable cycle was 35days for the year ended 31 December2013, compared with 47 days for the year ended 31 December 2012. This was due to timely payment to suppliers to secure quality and cost of raw materials.
Year ended 31 December
2013 2012 Change
--------- -------- ------------
Accounts receivable
(average debtor
days) 106 121 -15
Inventory (days) 20 21 -1
Accounts payable
(days) 35 47 -12
As at 31 December2013, the balance of prepayments to suppliers was RMB 65.2 million, a slight decrease when compared with the RMB 65.5 million at the year ended 31 December 2012. The prepayments were upfront deposits paid to suppliers for the acceptance of orders and to establish long-term cooperation. The main reason for the relatively high level of prepayments to trade suppliers was to lock in favourable purchase prices with suppliers and to guard against unfavourable fluctuations in raw material cost (the inflation level in China is relatively higher) to secure gross margins.
Commitments and contingencies
As at 31 December 2013, the Group had not provided any form of guarantee for any company outside the Group. The Group is currently not involved in any litigation matters and is not aware of any current or pending litigation issues relating to the Group.
Financial management policy
The Group continues to maintain a prudent approach to financial risk. The directors recognise the value of the UK Corporate Governance Code ("the Code"), and whilst under AIM rules full compliance is not required, the directors believe that the company applies the recommendations insofar as is practicable and appropriate for a public company of its size. Group business is principally conducted in RMB, so the impact of exchange rate risk on Group activities is limited. The Group does not take positions with financial instruments for hedging purposes. The Board does, however, continue to monitor foreign exchange risk, and is prepared to implement prudent risk-reduction measures such as hedging as and when necessary.
Significant investments and acquisitions
During the year, the Group made some major capital investments. First, it acquired a factory in Quangang, Quanzhou, Fujian Province, for RMB 160 million, which was paid in full during September and October 2013. The cost of office decoration and the machinery during the year was RMB 2.6 million in total.
Secondly, in September 2013, the Group entered into an agreement with the People's Government of Dazhu County in Sichuan Province to purchase land use rights, for 13.3 hectares of land, to develop a Naibu Industrial Zone. The Naibu Industrial Zone will include R&D, manufacturing and logistic facilities relating to the development of shoes, apparel, sports equipment, outdoor exercise goods and other sporting goods. It is anticipated that the Naibu Industrial Zone will include other relevant upstream and downstream industries in the supply chain for such goods. The Group will pay RMB 60 million for the land use rights, of which RMB 8 million has already been paid as a deposit. The total cost of investment for the project is expected to be exceeding RMB 300 million.
During the year, the Group did not dispose of or acquire any significant subsidiaries or businesses. The Group will, however, continue to seek business opportunities such as cooperation with international business partners to increase returns on shareholders' equity.
Dividend
The Board has decided to announce a final dividend payment of 4 pence per share to our shareholders. This dividend reflects the Board's positive outlook for the future of the Group, and also takes into consideration of the capital requirements for the Group.This dividend is subject to shareholder approval and the appropriate approvals of the Chinese authorities. The final dividend of 4 pence per share is expected to be paid on 15 August 2014 to shareholders on the register at the close of business on 4 July 2014. The shares will go ex-dividend on 2 July 2014.
Li Zhen
Chief Financial Officer
7 May 2014
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THEFINANCIAL YEAR ENDED 31 DECEMBER 2013
Year ended 31 December
2013 2012
Notes RMB'000 RMB'000
Revenue 1 1,927,967 1,676,613
Cost of sales (1,392,483) (1,207,224)
Gross profit 535,484 469,389
Other income 1,985 1,976
Selling and distribution expenses (90,403) (79,044)
Administrative expenses (29,027) (31,868)
Finance expense (924) -
Profit before taxation 2 417,115 360,453
Income tax expense 3 (109,332) (95,323)
Profit after taxation 307,783 265,130
Other comprehensive gain, net
of tax
-Translation differences arising
from foreign currency financial
statements recognised directly
in equity 784 480
Total comprehensive income
attributable to equity holders
of the parent 308,567 265,610
============ ============
Earnings per share - Basic
(RMB) 5 5.54 4.94
======= =======
Earnings per share - Diluted
(RMB) 5 5.42 4.86
======= =======
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2013
As at 31 December
2013 2012
Notes RMB'000 RMB'000
ASSETS
Non-current assets
Property, plant and equipment 105,202 10,568
Intangible assets 97,500 -
Long-term prepayment 15,179 33,275
217,881 43,843
Current assets
Inventories 91,606 64,829
Trade and other receivables 713,395 609,475
Cash and bank balances 468,281 452,906
------------ ----------
1,273,282 1,127,210
------------ ----------
Total assets 1,491,163 1,171,053
============ ==========
LIABILITIES AND EQUITY
Non-current liabilities
Deferred income tax liabilities 9,564 7,861
------------ ----------
9,564 7,861
Current liabilities
Trade payables 137,872 134,595
Other payables and accruals 42,675 35,009
Amount due to a director/shareholder 4,228 1,059
Income tax payable 24,168 20,446
------------ ----------
208,943 191,109
------------ ----------
Total liabilities 218,507 198,970
------------ ----------
Capital and Reserves
Stated capital account 8 77,667 54,314
Reserves 183,186 150,621
Retained earnings 1,011,803 767,148
------------ ----------
Total equity attributable
to equity holders of the
parent 1,272,656 972,083
------------ ----------
Total liabilities and
equity 1,491,163 1,171,053
============ ==========
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2013
Stated Re- Currency Statutory Retained Total
Capital Construction Translation Reserve Profits
Account Reserve Reserve
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Balance at 1 January
2012 - 31,426 2,178 88,835 529,731 652,170
Issue of ordinary shares,
net of share issue costs 54,314 (11) - - - 54,303
Profit for the year - - - - 265,130 265,130
Other comprehensive income
- Foreign currency translation
differences - - 480 - - 480
--------- ---------------- --------------- ---------- ---------- -------------
Total comprehensive income
for the year - - 480 - 265,130 265,610
Transfer to statutory
reserve - - - 27,712 (27,712) -
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2013
Stated Re- Currency Statutory Retained Total
Capital Construction Translation Reserve Profits
Account Reserve Reserve
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
--------------------------------- --------- -------------- ------------- ---------- ------------ ------------
Balance at 31 December
2012 54,314 31,415 2,658 116,547 767,149 972,083
Profit for the year - - - - 307,783 307,783
Other comprehensive income
- Foreign currency translation
differences - - 784 - - 784
--------- -------------- ------------- ---------- ------------ ------------
Total comprehensive income
for the year - - 784 - 307,783 308,567
Dividends 23,353 - - - (33,300) (9,947)
Share based payments - - - - 1,953 1,953
Transfer to statutory
reserve - - - 31,782 (31,782) -
Balance at 31 December
2013 76,667 31,415 3,442 148,329 1,011,803 1,272,656
================================= ========= ============== ============= ========== ============ ============
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE FINANCIALYEAR ENDED 31 DECEMBER 2013
Year ended 31 December
2013 2012
RMB'000 RMB'000
Cash flows from operating activities
Profit before taxation 417,115 360,453
Adjustments for :
Depreciation and amortisation 21,063 5,515
Interest income (1,691) (1,281)
Operating profit before working capital
changes 436,487 364,687
Decrease / (increase) in inventories (26,777) 14,145
(Increase) in trade and other receivables (101,183) (89,149)
(Decrease) / increase in trade payables 3,277 (47,743)
Increase in accruals and other payables 7,666 612
Net cash generated by operating activities 319,470 242,552
Interest received 1,691 1,281
Income tax paid (103,907) (96,875)
Net cash generated by operating activities 217,254 146,958
------------- ----------
Cash flows from investing activities
Acquisition of property, plant and
equipment (89,602) (17)
Purchase of land use right (105,500) -
Refurbishment of property, plant and
equipment - (36,191)
Net cash used in investing activities (195,102) (36,208)
------------- ----------
Cash flows from financing activities
Share issue proceeds, net of issue
costs - 54,314
Dividends paid (9,946) -
Advances from a director/shareholder 3,169 1,041
Net cash (used in) / generated from
financing activities (6,777) 55,355
------------- ----------
Net increase in cash and cash equivalent 15,375 166,105
Cash and cash equivalent at beginning
of the financial year 452,906 286,801
Cash and cash equivalent at end of
the financial year 17 468,281 452,906
============= ==========
Basis of preparation note
The consolidated financial information has been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS") issued by the International Accounting Standards Board ("IASB") including related interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC") and using the accounting policies which are consistent with those adopted in the financial statements for the year ended 31 December 2012.
The financial information set out in this preliminary announcement does not constitute audited financial statements for the year ended 31 December 2013. The financial information for the year ended 31 December 2013 is derived from draft financial statements. The audit of the statutory accounts for the year ended 31 December 2013 is not yet complete. These accounts are expected to be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Jersey Companies Registry following the company's annual general meeting.
The financial information for the year ended 31 December 2012 set out in this financial information does not comprise the Group's statutory financial statements. They have been extracted from those financial statements. The auditors have reported on those financial statements, their audit report was unqualified.
The financial information set out in this announcement was approved and authorised for issue by the board of directors on 7 May 2014.
Copies of this financial information will be available on the Company's website.
Notes to the financial information
1. REVENUE AND OTHER INCOME
Revenue represents the net invoiced value of goods sold, after allowances for returns and trade discounts. An analysis of the Group's revenue and other income is as follows:
Year ended 31 December
2013 2012
RMB'000 RMB'000
Revenue 1,927,967 1,676,613
============= ============
Other income:
Interest income 1,691 1,282
Others 294 694
------------- ------------
1,985 1,976
============= ============
2. PROFIT BEFORE TAXATION
The Group's profit before taxation is arrived at:
Year ended 31 December
Note 2013 2012
RMB'000 RMB'000
After charging:
Cost of inventories recognised
as expenses 1,235,990 1,048,319
Minimum lease payments
under operating leases
for leasehold buildings 2,623 2,737
Depreciation and amortisation* 6,7 21,063 5,515
Research and development
costs 25,904 27,261
Advertisement expenses 30,200 29,484
Renovation allowance 24,417 8,740
Fees payable to the company's
auditor for the audit
of the financial statements 729 701
* Depreciation expenses of approximately RMB 1,594,000, RMB 26,000 and RMB 3,895,000, and RMB 1,594,000, RMB 26,000 and RMB19,443,000 have been charged in cost of sales, selling and distribution expenses and administrative expenses on the face of the consolidated statements of comprehensive income for the financial year ended 31 December 2012 and 31 December 2013respectively.
3. INCOME TAX EXPENSE
Year ended 31 December
2013 2012
RMB'000 RMB'000
PRC income tax 106,471 92,829
PRC withholding tax 1,158 -
------------ -----------
Total current tax 107,629 92,829
Deferred tax 1,703 2,494
------------ -----------
Total tax charge 109,332 95,323
============ ===========
The reconciliation between tax expense and accounting profit at applicable tax rates is as follows:
Year ended 31 December
2013 2012
RMB'000 RMB'000
Profit before taxation 417,115 360,453
============ ===========
Tax at the applicable tax
rate of 25% 104,279 90,113
Tax effect of non-deductible
expenses 575 567
Different tax rate in different
jurisdictions 1,617 2,149
Effect of deferred tax on
undistributed PRC earnings 1,703 2,494
Withholding tax expense 1,158 -
------------ -----------
109,332 95,323
============ ===========
Naibu HK:
Naibu HK incurred losses for the financial years ended 31 December 2012 and 31 December 2013 respectively. The statutory income tax rate applicable to the Company is 16.5%.
Naibu China:
On 16 March 2007, the National People's Congress promulgated the PRC Enterprise Income Tax Law (the "New Tax Law"), which became effective from 1 January 2008.
Based on the "Income Tax Law of the PRC for Enterprises with Foreign Investments and Foreign Enterprises", Naibu China is entitled to full exemption from income tax for the first two years and a 50% reduction in income tax for the next three years starting from its first profitable year of operations. The first profit-making year of Naibu China commenced in 2006. Naibu China has obtained written confirmation from the relevant PRC tax authorities confirming that its 5 year tax holiday period commenced from 1 January 2006. Naibu China was entitled to full exemption of income tax for two years from 1 January 2006 to 31 December 2007, followed by a three year 50% relief from 1 January 2008 to 31 December 2010. Effective from 1 January 2011, Naibu China will be subject to Enterprise Income Tax ("EIT") at a standard rate of 25%.
4. DIVIDENDS
Dividends disclosed represent dividends on ordinary shares declared and paid by the Company to its equity holders. The Company also operates a scrip dividend scheme, whereby shareholders can elect to receive their dividends in cash or new shares.
The Company has resolved to pay a final dividend in respect of the year ended 31 December 2013 of 4 pence per share, subject to shareholder approval and the appropriate approval of the Chinese authorities.
The Company has declared a final dividend for the year ended 31 December 2012 of 4 pence per share. The dividend had been paid on 30 September 2013 by the Company, of which GBP 441,139 was paid in cash and GBP 1,752,408 in new shares.
The Company has declared an interim dividend in respect of the period ended 30 June 2013 of 2 pence per share. The dividend had been paid on 16 December 2013 by the Company, of which GBP 558,168 was paid in cash and GBP 595,687 in new shares.
5. EARNINGS PER SHARE
(a) Basic
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period:
Year ended 31 December
2013 2012
Profit attributable to
equity holders of the
Company (RMB'000) 307,783 265,130
Weighted average number
of ordinary shares in issue
('000) 55,589 53,629
Profit per share (RMB) 5.54 4.94
(b) Diluted
Diluted earnings per share is calculated by adjusting the weighted number of ordinary shares in issue to assume conversion of all potential dilutive ordinary shares during the period.
Year ended 31 December
2013 2012
Profit attributable to
equity holders of the
Company (RMB'000) 307,783 265,130
Weighted average number
of ordinary shares in issue
('000) 56,782 54,524
Profit per share (RMB) 5.42 4.86
The weighted average number of shares for the purposes of diluted earnings per share include approximately 1.2 million options of shares granted to Giles Elliott and Daniel Stewart Securities plc as part of the IPO process. The share options have an exercise price of GBP1.24 and expire after five years.
Furniture,
fixtures Construction
Plant and in Progress
Office and office Motor
renovation machinery equipment vehicles Total
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Year ended 31 December
2012
Opening net book
amount 1,553 9,763 768 1,066 - 13,150
Additions - - 17 - - 17
Depreciation charge (560) (1,581) (189) (269) - (2,599)
Closing net book
amount 993 8,182 596 797 - 10,568
At 31 December 2012
Cost 2,800 17,568 1,601 1,813 - 23,783
Accumulated depreciation (1,247) (1,807) (9,386) (1,006) - (1,016)
Net book amount 993 8,182 596 797 - 10,568
6. PROPERTY, PLANT AND EQUIPMENT
Year ended 31 December
2013
-
Opening net book
amount 993 8,181 596 797 - 10,568
Additions - 1,000 2 - 96,600 97,602
Depreciation charge (860) (1,649) (190) (269) - (2,968)
Closing net book
amount 133 7,533 408 528 96,600 105,202
At 31 December 2013
Cost 2,800 18,569 1,603 1,812 96,600 121,384
Accumulated depreciation (2,667) (11,036) (1,195) (1,284) - (16,182)
Net book amount 133 7,533 408 528 96,600 105,202
All property, plant and equipment held by the Group are located in the PRC.
The recoverable amount of each asset is determined using the value in use calculations with key assumptions relating to discount rates, growth rates and expected changes to selling prices and costs during the period. The discount rate of 19.4% is used which reflects current market assessments of the time value of money and risks specific to the business in question.
Growth rates and changes in selling prices and costs are based on our expectations of future performance in the markets in which the Group operates. These are consistent with the Group's plans and forecast for 2014 and 2015 and extrapolated cash flows for the following three years, reflecting the long-term nature of the businesses, based on estimated growth rates of 5%. A fluctuation of 5% in the discount rate or an increase in the underlying costs associated with the use of these assets of 25% would not affect the carrying value of the property, plant and equipment, or the land use rights detailed in note 7.
7. INTANGIBLE ASSETS - LAND USE RIGHTS
The land use right refers to the acquisitions of the land at the Quangang plant. As at 31 December 2013, the Group had paid for the full amount of land use rights but yet to obtain the land use right certificate to commence use of this parcel of land, and amortisation has not yet commenced on this land use right accordingly.
Quangang Dazhu Total
RMB'000 RMB'000 RMB'000
Year ended 31 December
2013
-
Opening net book - - -
amount
Additions 97,500 - 97,500
Amortisation charge - - -
Closing net book
amount 97,500 - 97,500
Cost 97,500 - 97,500
Accumulated amortisation - - -
Net book amount 97,500 - 97,500
8. STATED CAPITAL ACCOUNT
Ordinary shares of no par value
Issued and fully paid Year ended 31 December 2012/2013
As at 1 January 2012 Number RMB'000
--------------------------- ------------ -------------
Issue of shares on 2 -
incorporation
--------------------------- ------------ -------------
Share issue (9 February
2012) 990,000 801
--------------------------- ------------ -------------
Share issue (13 February
2012) 9,998 8
--------------------------- ------------ -------------
Share split (27 February 49,000,000 -
2012)
--------------------------- ------------ -------------
Share issued on admission
to trading on AIM,
net of issue costs 4,838,716 53,505
--------------------------- ------------ -------------
As at 31 December
2012 54,838,716 54,314
--------------------------- ------------ -------------
Share issue due to
scrip dividend (30
September 2013) 2,854,086 17,418
--------------------------- ------------ -------------
Share issue due to
scrip dividend (16
December 2013) 883,809 5,935
--------------------------- ------------ -------------
As at 31 December
2013 58,576,611 77,667
--------------------------- ------------ -------------
On incorporation, the company issued 2 Ordinary shares of no par value. On 8 February 2012, the Company issued 990,000 Ordinary share of no par value. On 13 February 2012, the Company issued 9,998 Ordinary shares of no par value. On 27 February 2012, the Company subdivided each issued Ordinary share of no par value into 50 Ordinary shares of no par value at HKD0.02 per share.
The admission of the enlarged Share Capital to trading was effective on 5 April 2012 with a placing of 4,838,716 Ordinary shares of no par value at 124 pence per share (RMB 60,131,478). The share issue costs associated with this transaction of RMB 6,626,818 (GBP 661,234) have been deducted from the Company's stated capital.
Under the Memorandum of Association, the Company is authorised to issue an unlimited number of Ordinary shares of no par value.
On 30 September 2013,a total of 2,854,086 new ordinary shares of the Company was admitted to trading on AIM, as a result of the final scrip dividend of 2012.
On 16 December 2013,a total of 883,809 new ordinary shares of the Company was admitted to trading on AIM, as a result of the interim scrip dividend of 2013.
9. SHARE OPTIONS AND WARRANTS
Share options
The Group has established a share option scheme for Directors of the Group. The share option scheme is administered by the Remuneration Committee.
Details of the share options outstanding at the year end are as follows:
Number Exercise Number Exercise
31 Dec 2013 Price 31 Dec 2012 Price
31 Dec 2013 31 Dec 2012
--------------------- ------------- ------------- ------------- -------------
Outstanding at 1
January 645,161 124p - -
--------------------- ------------- ------------- ------------- -------------
Granted during year - - 645,161 124p
--------------------- ------------- ------------- ------------- -------------
Outstanding at 31
December 645,161 124p 645,161 124p
--------------------- ------------- ------------- ------------- -------------
Exercisable at 31 - - - -
December
--------------------- ------------- ------------- ------------- -------------
The options were issued to Giles Elliott, and will vest in three equal tranches on 30 March 2014, 30 March 2015 and 30 March 2016. The options can be exercised from 30 March 2014 and will expire on 30 March 2022.
A charge of RMB 1,953,103 (2012: RMB nil) has been recognised in the statement of comprehensive income within administrative expenses on a pro-rata basis over the vesting period for the year relating to these options.
These fair values were calculated using the Black Scholes option pricing model. The inputs into the model were as follows:
Share Options
granted 30
March 2012
------------------ --------------
Options Granted 645,161
------------------ --------------
Stock price 124p
------------------ --------------
Exercise price 124p
------------------ --------------
Risk free rate 0.35%
------------------ --------------
Volatility 50.05%
------------------ --------------
Time to maturity 10 years
------------------ --------------
Warrants
On 30 March 2012, the Group executed a warrant instrument to create and issue warrants to Daniel Stewart Securities plc to subscribe for an aggregate of 548,387 ordinary shares. The warrants will expire five years after admission and were exercisable immediately at the placing price of 124p. The ordinary shares to be allotted and issued on the exercise of any or all of the warrants will rank for all dividends and other distributions declared after the date of the allotment of such shares but not before such date and otherwise pari passu in all respects with the ordinary shares in issue on the date of such exercise allotment.
These fair values were calculated using the Black Scholes warrant pricing model. The inputs into the model were as follows:
Warrants
issued 30
March 2012
------------------ ------------
Warrants Granted 548,387
------------------ ------------
Stock price 124p
------------------ ------------
Exercise price 124p
------------------ ------------
Risk free rate 0.35%
------------------ ------------
Volatility 50.05%
------------------ ------------
Time to maturity 5 years
------------------ ------------
A charge of RMB 2,826,553 (2012: RMB nil) has been recognised in equity for the year within stated capital with an equivalent increase in stated capital.
10. SEGMENT INFORMATION
Business segment
The Group's primary format for reporting segment information is business segments, with each segment representing a product category. The Group's business segments are organised as follows:
(i) Design, manufacture and sale of sports and leisure footwear
Design, manufacture and sale of sports and leisure footwear which comprise athletic footwear designed for specific sporting activities such as running, tennis, basketball and skate board as well as leisure footwear, marketed under the "Naibu" brand.
(ii) Design and sale of sports apparels and accessories
Sports apparels and accessories comprise apparels for specific sporting activities such as running, tennis, basketball and leisure; functional apparels such as t-shirts, polo shirts and windbreakers; and accessories such as sport bags, caps, socks, protective guards and basketballs, marketed under the "Naibu" brand.
Geographical segment
As the business of the Group is principally engaged in the PRC, no reporting by geographical location of operation is presented.
The segment information provided to the management for the reportable segments for the financial year from 1 January 2013 to 31 December 2013 is as follows:
(A) Financial Period from 1 January 2013 to 31 December 2013
Shoes Apparels Un Total
and Accessories allocated
RMB'000 RMB'000 RMB'000 RMB'000
Revenue:
Revenues from external
customers (1) 1,033,431 894,536 - 1,927,967
-------------------------------- ---------- ----------------- ----------- ----------
Results:
Interest income 906 785 - 1,691
Depreciation 12,030 9,033 - 21,063
Segment profit 212,799 211,490 (7,174) 417,115
-------------------------------- ---------- ----------------- ----------- ----------
Assets:
Addition to non-current
assets (2) 195,101 1 - 195,102
Reportable segment assets 575,358 442,356 473,449 1,491,163
-------------------------------- ---------- ----------------- ----------- ----------
Liabilities:
Reportable segment liabilities 109,736 90,394 18,377 218,507
-------------------------------- ---------- ----------------- ----------- ----------
(1) Revenues from the Group's top two customers amounted to approximately RMB 386,249,867, which contributed10.5%and 9.5% of the Group's total revenue. These revenue are attributable for both the shoes and apparels and accessories segments.
(2) Additions to non-current assets relate to additions to property, plant and equipment.
(B) Reconciliation of reportable segment revenue, profit and loss, assets and liabilities
For the financial
year
ended 31 December
2013
RMB'000
Profit or loss
Total profit for reportable segments 424,289
Unallocated other income and expenses
Administrative expenses (7,174)
Profit before taxation 417,115
RMB'000
Assets
Total assets for reportable segments 1,017,714
Unallocated
Cash and cash equivalents 468,281
Amount due from a related party 5,169
Liabilities
Total liabilities for reportable segments 200,130
Unallocated
Deferred income tax liabilities 9,564
Other payables and accruals 5,761
Amount due to a director/shareholder 3,052
The segment information provided to the management for the reportable segments for the financial year from 1 January 2012 to 31 December 2012 is as follows:
(C) Financial Periodfrom 1 January 2012to 31 December 2012
Shoes Apparels Un Total
and Accessories allocated
RMB'000 RMB'000 RMB'000 RMB'000
Revenue:
Revenues from external
customers (1) 919,271 757,342 - 1,676,613
-------------------------------- -------- ----------------- ----------- ----------
Results:
Interest income 703 579 - 1,282
Depreciation 3,744 1,771 - 5,515
Segment profit 186,982 182,971 (9,500) 360,453
-------------------------------- -------- ----------------- ----------- ----------
Assets:
Addition to non-current
assets (2) 19,853 16,355 - 36,208
Reportable segment assets 377,472 330,506 463,075 1,171,053
-------------------------------- -------- ----------------- ----------- ----------
Liabilities:
Reportable segment liabilities 85,801 100,172 12,997 198,970
-------------------------------- -------- ----------------- ----------- ----------
(3) Revenues from the Group's top two customers amounted to approximately RMB 356,127,551, which contributed 11% and 10% of the Group's total revenue. These revenues are attributable for both the shoes and apparels and accessories segments.
(4) Additions to non-current assets relate to additions to property, plant and equipment.
(D) Reconciliation of reportable segment revenue, profit and loss, assets and liabilities
For the financial
year ended 31
December 2012
RMB'000
Profit or loss
Total profit for reportable segments 369,953
Unallocated other income and expenses
Administrative expenses (9,500)
Profit before taxation 360,453
RMB'000
Assets
Total assets for reportable segments 707,978
Unallocated
Cash and cash equivalents 452,906
Amount due from a related party 10,169
1,171,053
Liabilities
Total liabilities for reportable segments 185,973
Unallocated
Deferred income tax liabilities 7,861
Other payables and accruals 4,076
Amount due to a director/shareholder 1,059
198,970
11. RELATED PARTY TRANSACTIONS
In addition to the transactions and balances detailed elsewhere in this report, the Group had the following transactions with related parties at agreed rates:
Year ended 31 December
2013 2012
RMB'000 RMB'000
Rental paid to a related party(a) 960 960
Other receivable from a related party(a)
(deposit payment) 5,100 1,100
Other payable to shareholders 3,052 1,059
Remuneration of Ms. Lin Zhenzhi(b) 290 149
Directors' remuneration (inclusive
of retirement scheme contribution)
* Mr. Lin Huoyan 1,805 1,414
* Mr. Lin Congdeng 1,601 1,239
604 -
* Ms. Li Zhen
* Mr. Chi Keung (Kenny) Law(c) 316 980
* Mr. Giles Elliott 581 459
- Mr. David Thomas 388 306
- Mr. Stephen Cheung 388 306
(a) Related party relates to Fujian Jun Xiang Bags Co., Ltd. (formerly known as Quanzhou Naibu Sports Co., Ltd) in which a director, Mr Lin Huoyan was the shareholder in 2008 and 2009. Mr Lin Huoyan transferred his shareholding to his mother in 2010.
The transaction for the acquisition of factory premise owned by the related party Fujian Jun Xiang Bags Co., Ltd. did not take place and was cancelled in 2012. The deposit for the property acquisition RMB10 million has been partly returned and the rest of balance RMB 5 million was transferred to the deposit of long-term lease payment for the property.
(b) Ms. Lin Zhenzhi is the finance director of the Group's operating subsidiary Naibu China Co., Limited and she is Mr. Lin Huoyan's sister.
(c) On 22 January 2013, Mr. Kenny Law resigned from the board and the position of CFO and decided to return to Singapore. On the same day, the Company announced the appointment of Ms. Zhen Li, as Mr. Law's successor as CFO of the Company. The remuneration of Mr. Kenny Law paid during the period ended 31 December 2013 also included the amount of SGD 50,000 as a listing bonus.
- Ends -
This information is provided by RNS
The company news service from the London Stock Exchange
END
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