Post on 15-Apr-2020
Artini China Co. Ltd.
Annual Results 2007/08
Corporate PresentationJuly 2008
1
Disclaimer Disclaimer
This document does not constitute, or form part of any offer for subscription or sale of, or solicitation of any offer to subscribe for or buy of any securities of Artini China Co. Ltd. ("the Company"), nor shall it be construed as calculated to invite any such offer, nor shall this document or any part of it form the basis of, nor can it be relied upon in connection with, or act as an inducement to enter into any contract or commitment whatsoever. Accordingly, any decision in connection with the subscription or acquisition of securities of the Company pursuant to or in connection with any offering must be made solely on the basis of the information to be contained in the prospectus or other offering circular that may be issued by the Company in connection with such offering. The information of the documents should not be relied upon as representation of the Company.
FORWARD-LOOKING STATEMENTS
This presentation contains certain forward-looking statements with respect to the financial condition, results of operations and business of the Company in the PRC, Hong Kong and Macao and certain of the plans and objectives of the management of the Company. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results or performance of the Company to be materially different from any future results or performance expressed or implied by such forward-looking statements. Such forward-looking statements were based on assumptions regarding the Company's present and future business strategies and the political and economic environment in which the Company and its subsidiaries will operate in the future. Reliance should not be placed on these forward-looking statements, which reflect the view of the Company's management as of the date of this presentation only. There can be no assurance that future results or events will be consistent with any such forward-looking statements.
CONFIDENTIALITY
This document is given to you on a confidential basis and must not be passed to or transmitted to, or their contents be disclosed to, any other person and no copy shall be taken hereof.
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25Future StrategiesFuture Strategies
30Open ForumOpen Forum
7Financial HighlightsFinancial Highlights
Page
Major Major AchievementAchievementss 3
Business ReviewBusiness Review 14
Content Content
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Major Major AchievementAchievementss
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Major Achievements
Successfully listed on the Main Board of the HKSE on 16 May 2008, raised a total sum of HK$621,600,000
Further strengthened management and design team� Senior members recruited after listing included General Manager of HR, Training
Director (China), Financial Controller (Retail), Image Director, Brand Director and 2 designers
Retail business accounted for 49.8% of the Group’s total turnover, an increase of 26.6% points comparing to last financial year
Enhancing brand value of and drives the selling price of new products upward
Number of retail points increased from 48 as at 31 March 2007 to 138 as at March 2008
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Results Highlights
Same-store Sales Growth
Hong Kong and MacauPRCOct – Dec 2007 vsJan – Mar 2008
2%
16%
-
1%
Change20072008For the year ended 31 March
+49.7%73,488110,024Profit for the year (HK$ ‘000)
+50.0%0.0980.147Basic earnings per share (HK$)
+9048138Number of retail points
339,480596,739 +75.8%Turnover (HK$ ‘000)
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Eastern Eastern China China Western Western
ChinaChinaAA
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QQSouthernSouthernChinaChina
NorthernNorthernChinaChina
Total retail points further expanded to 160 spanning over 34 cities in the PRC, Hong Kong and Macao as at 30 June 2008
22 outlets opened after 31 March 2008 mostly in top shopping arcades, including:� Grand Pacific in Beijing
� Wangfujing Department Store in Chongqing
Network Expansion
QQAA
5945
As at 30 June 2008
As at 31 March 2008
138
93
160
101
Total
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Financial Financial HighlightsHighlights
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Results Summary
49.7%73,488110,024Profit for the year
54.8%84,255130,437Profit from operations
96.4%191,696376,426Gross profit
Change20072008For the year ended 31 March (HK$ ‘000)
50.0%0.0980.147Basic earnings per share (HK$)
339,480596,739 75.8%Turnover
The Board recommended a special dividend of HK$0.04 per share
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260.8299.3
78.7
297.4
0
100
200
300
400
500
600
03/2007 03/2008
Strong Turnover Growth Strong Turnover Growth
339.5
Turnover Breakdown Turnover Analysis by Geographical Segments
Note: Financial year end date is 31 March
HK$ mn
CDM TurnoverRetail Turnover
23.2%
49.8%10.2%
4.6%
2.9%
2.3%
13.9%
9.4%
1.3%
3.7%
21.6%
12.9%
26.9%
17.3%
0%
20%
40%
60%
80%
100%
03/2007 03/2008
As a % of turnover
Europe America
Hong Kong Africa
Retail
CDMChina
Other Asia-Pacific regions
596.7
Gro
wth
: 75.8
%
10
16.4
8.0
13.0%
9.8%
0
2
4
6
8
10
12
14
16
18
03/2007 03/20080%
2%
4%
6%
8%
10%
12%
14%
16%
HK$ mn
Income Tax and Effective Tax Rate
Tax Paid Effective Tax Rate
Net Profit and Net Profit Margin
HK$ mn
Net Profit Net Profit Margin
Solid Financial PerformanceSolid Financial Performance
110.0
73.5 18.4%
21.6%
0
20
40
60
80
100
120
03/2007 03/20080%
5%
10%
15%
20%
25%
30%
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Operational DataOperational Data and Rental Analysisand Rental Analysis
Rental Analysis
Percentage of turnover (average)
Average rent (HK$)
As at 31 March 2008 ConcessionsRetail Stores
89,000 38,000
17.8% 25.7%
Average pay-back period (months)Average store-opening cost (HK’000)
232
334
312
566Retail Stores 4.0
Concessions 5.7
Retail Stores 5.8
Concessions 12.5
Operational Data
Same-store Sales Growth
Hong Kong and MacauPRCOct – Dec 2007 vs Jan – Mar 2008
2%
16%
-
1%
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Key Financial RatiosKey Financial Ratios
1.81.4Current ratio (x)
For the year ended 31 March 2008 2007
Inventory turnover (Days) 70 55
Trade receivables turnover (Days) 30 25
Trade payables turnover (Days) 19 19
ROA(%) 36.4 41.9
ROE (%) 86.3 104
Debt to equity (x) 1.1 0.6
Interest coverage ratio (x) 32.6 30
133,00045,00036,483TOTAL
4,000——Head offices and regional offices
20,000——Logistic centre
48,00035,9805,516Leasehold renovation –Retail and Concession Stores, fixtures and fittings
61,0009,02030,967Leasehold land and building plant and machinery
200920082007HK$ ’000
For the year ended 31 March
Planned Capital Expenditures
Capital Expenditures
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Use of Proceeds Updates
HK$ ‘000Use of Proceeds (already incurred)
Expansion of the PRC retail network by opening new retail stores and concessions
Expansion of manufacturing plant to increase productioncapacity
Marketing and promotion of “Artini” and “Q’ggle” brands
Addition and improvement of operational system andlogistic centers
Development of advanced information technologymanagement system
2,250
6,720
1,000
-
-
As at 18 July 2008
General working capital -
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Business ReviewBusiness Review
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WesternWesternChinaChina
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EasternEasternChinaChina
SouthernSouthernChinaChina
NorthernNorthernChinaChina
Benefited from an effective branding strategyto obtain prime store locations with favourable rental terms
Rapid Network ExpansionRapid Network Expansion
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Northern China
Western China
Southern China
Eastern China
RegionRetail Stores/Concessions*
TotalUsableArea
(sq. m)
LargeScale Store*
StandardStores*
- Shanghai 3/8 208/589 3 8
- Ningbo -/2 -/50 - 2
- Others 5/22 187/1155 2 25
- Guangzhou 4/4 468/235 4 4
- Shenzhen 9/10 1,304/895 11 8
- Others -/15 -/612 4 11
- Chongqing 1/6 104/255 1 6
- Chengdu -/6 -/202 - 6
- Wuhan 2/4 72/162 - 6
- Others 4/7 159/284 - 11
- Beijing 9/12 717/749 8 13
- Tianjin -/2 -/135 1 1
- Others -/16 -/730 0 16
Hong Kong 3/4 136/52 - 7
Macao 2/- 305/- 2 -
Total 42/118 3,252/ 6,722 36 124
* As at 30 June 2008* Large Scale Stores are stores with useable area larger than 80 sq. m.
Standard Stores are stores with useable area less than 80. sq. m.
QQAA
Chengdu:Chengdu:SeibuSeibu ((西武西武西武西武西武西武西武西武))
Beijing: Beijing: Raffles Beijing HotelRaffles Beijing Hotel
((北京飯店北京飯店北京飯店北京飯店北京飯店北京飯店北京飯店北京飯店))
Wuhan: Wuhan: New World (New World (新世界新世界新世界新世界新世界新世界新世界新世界))
Macao:Macao:Venetian (Venetian (威尼斯人威尼斯人威尼斯人威尼斯人威尼斯人威尼斯人威尼斯人威尼斯人))
Hong Kong: Hong Kong: HarbourHarbour City (City (海港城海港城海港城海港城海港城海港城海港城海港城))
Guangzhou:Guangzhou:Teem PlazaTeem Plaza
((天河城天河城天河城天河城天河城天河城天河城天河城))
Shanghai:Shanghai:Super Brand MallSuper Brand Mall
((正大廣場正大廣場正大廣場正大廣場正大廣場正大廣場正大廣場正大廣場))
Shenzhen:Shenzhen:MixcMixc Plaza (Plaza (萬象城萬象城萬象城萬象城萬象城萬象城萬象城萬象城))
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New Outlets OpenedNew Outlets Opened
ChengshaChengsha HeiwadoHeiwado
((長沙平和堂長沙平和堂長沙平和堂長沙平和堂長沙平和堂長沙平和堂長沙平和堂長沙平和堂))
Shanghai Super Brand MallShanghai Super Brand Mall
Store Opening (Store Opening (上海正大廣場上海正大廣場上海正大廣場上海正大廣場上海正大廣場上海正大廣場上海正大廣場上海正大廣場))
22 outlets opened after 31 March 2008 mostly in top shopping arcades
Beijing Grand PacificBeijing Grand Pacific
((北京君太北京君太北京君太北京君太北京君太北京君太北京君太北京君太))
Qingdao Qingdao HisenseHisense MallMall
((青島青島青島青島青島青島青島青島海信广场海信广场海信广场海信广场海信广场海信广场海信广场海信广场))
Chongqing Chongqing WangfujingWangfujing
Dept Store (Dept Store (重慶重慶重慶重慶重慶重慶重慶重慶王府井百货王府井百货王府井百货王府井百货王府井百货王府井百货王府井百货王府井百货))
Fuzhou Grand OceanFuzhou Grand Ocean
((福州大洋百貨福州大洋百貨福州大洋百貨福州大洋百貨))))福州大洋百貨福州大洋百貨福州大洋百貨福州大洋百貨))))
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ExExcellent cellent DDevelopment ofevelopment of Retail BusinessRetail Business
No. of VIP
TotalStore
Area (sq.m)
No. of retail
points
59,54356,28628,108
5,6825,0762,097
1019341
31 Mar 2007 3/2008 30 Jun 200831 Mar 2008
6,9323,691681
4,2923,843362
59453
31 Mar 2007 31 Mar 2008 30 Jun 2008
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International International Product Design TeamProduct Design Team
Professional design team comprising 38 designers from the UK, the PRC and Hong Kong, newly employed 2 since IPO
Design over 850 models of products each month
Three segregated design teams
Library
MarketingProduction
Design Team
Key designers from prestigious design schools, which include:
� Central Saint Martins College of Art and Design in London
� Duncan of Jordanstone College of Art
� Royal College of Art
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New Products Series
2008 Spring/ Summer Series
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EEffective ffective MMarketing arketing CCampaignampaign
Shanghai Airport
Beijing San Li Tun
7 Roadshows
Crossover withShiseido & Lancome
Fashion Shows Over 59,000 VIPs
BAZZAR
Modern Magazine
ShenzhenSubway
Shenzhen Outdoor
6 RoadshowsCrossover with
Laneige Fashion Shows Over 6,900 VIPs Yahoo
Cosmopolitan
Media Relations
CRM ProgramMarketing Campaigns
Strategic Alliances
Brand Ambassador
Advertisement
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New Marketing Campaign
Beauty Contest
Fund Raising for the Sichuan Earthquake
Sales of RMB1,000,000 generated on 18th May 2008 from nationwide Artiniand Q’ggle retail outlets had been donated to the area for disaster relief
Artini’s Image Consultant Day
Further enhance brand equity via different marketing activities
22
New Marketing Campaign
Magazine Promotion
Online MagazineRoadshow
Music Show
Further drew the attention of the target group by various marketing channels and activities
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VIP Campaign
VIP Day
Number of VIPs increased rapidly to 66,475 at of 30 June 2008
� An increase of 131% from 28,789 as at 31 March 2007
� Increased by 6,493 from 59,977 as at 31 March 2008
VIP accounted for approximately 20% of total sales as at March 2008
Further enhance the customer loyalty
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Ms. Belinda KwanBrand Director
Worked as Merchandising Director of Gianni Versace
Responsible for brand management and chain’s merchandising and operation ofGianni Versace in HK and the PRC
Ms. Pamela LowImage Director
Previously worked at Alan Chan Design, Brushstroke Bozell Worldwide and Art Director of Lane Crawford
Strengthened Management Team
5 senior management newly joined the Group
Mr. Deric LamGeneral Manager of Human Resources
Over 10 years’ experience ininternational brand retail chain operators,i.e. Burberry, Bally, MaxMara, Jean Paul Gaultier in Greater China Region
And worked atLi & Fung retail division
Ms. Rita ChanFinancial Controller (Retail)
CPA qualification
Over 10 years’ accounting and financial experience in retailing in China
Ms. Celeste GeTraining Director (China)
Over 10 years’ experience in retail training with Avon China as National Training Director
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Future StrategiesFuture Strategies
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Corporate MissionCorporate Mission
Enhancebrand
awarenessand promote
customerloyalty
Develop and expand retail business in the PRC
Broaden product offeringsand client bases
Enhance brand equity
Implement multi-brandsstrategies
To become one of the largest
fashionaccessories retail brand operatorsin the PRCFurther strengthen
CDM business
27
Expand networks in the PRC
-
+1
-
--+1
ARO
As at 31 MarchAs at 31 March
2008 2009 2008 2009
Retail Stores
+3 +5 Eastern China - +9
+5 +2 Southern China +4 +3
+3 +2 Western China +1 +2
-1 +2 Northern China +3 +1
+1 - Hong Kong & Macao +1 -
+11 +11 Sub-total +9 +15
Concessions
+9 +12 Eastern China +7 +19
+7 +5 Southern China +10 +16
+7 +5 Western China +5 +13
+11 +7 Northern China +10 +15
- - Hong Kong & Macao - -
+34 +29 Sub-total +32 +63
+46 +40 Growth +42 +78
93 133 Total 45 123
Develop and Expand Retail Business in the PRC
Leverage on influence in 1st tier cities to further expand in nearby 2nd tier cities
Expand to 2nd tier cities and some 3rd tier cities to capture the rapid growth potential
Concept stores of & are expected to be opened in 3Q 2008
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Diversify product offering to enlarge target consumer groups
� Gift and premium items
� Limited edition series
� 925 silverware series
� Acquisition of new brands
Vertical Expansion
Continue to recruit designers from Europe and North America
Strengthen internal training, encourage design team to participate in international exhibitions and design contests to keep abreast of latest international design inspirations
Plan to establish an international design institute in the PRC to nurture potential talentin the PRC
Broaden product offerings
Broaden Product Offerings withBroaden Product Offerings with
New Product LinesNew Product Lines
Widen product ranges to increase purchase frequency and usage
� Clothing and home décors
� one-stop shopping fashion accessories concept, such as sandals, tees, stationeries, under wears
Horizontal Expansion
Enhance the competitiveness of our design team
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Future StrategiesFuture Strategies
Expand CDM customers and increase market sharein the PRC
Explore business opportunities and formation ofstrategic alliances with different brands
Increase production capacity
Enhancebrand equity
Implementmulti-brands
strategies
Furtherstrengthen
CDM business
Introduce international brands
Launch new proprietary brands
Brand acquisition and strategic alliances
CRM Program
� Crossover projects with international brands
Strategic Alliances� Strive to increase VIP numbers
Advertising Promotion
Marketing Campaigns
Brand Ambassador
3030
Open ForumOpen Forum