EXCEED COMPANY LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Year ended December 31, 2013
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Notes |
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2013 |
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2013 |
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2012 |
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2011 |
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(in thousands except for share and per share data) |
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USD'000 |
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RMB'000 |
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RMB'000 |
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RMB'000 |
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| REVENUE |
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6 |
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269,193 |
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1,629,616 |
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2,383,516 |
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3,288,561 |
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| Cost of sales |
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(196,352 |
) |
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(1,188,657 |
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(1,707,801 |
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(2,296,298 |
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| Gross profit |
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72,841 |
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440,959 |
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675,715 |
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992,263 |
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| Other income and gains |
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6 |
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2,007 |
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12,150 |
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15,917 |
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14,791 |
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| Selling and distribution expenses |
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(43,086 |
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(260,828 |
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(347,680 |
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(377,903 |
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| Administrative expenses |
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(8,458 |
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(51,203 |
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(67,932 |
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(77,073 |
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| Research and development expenses |
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(7,700 |
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(46,613 |
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(44,227 |
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(53,863 |
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| OPERATING PROFIT |
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15,604 |
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94,465 |
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231,793 |
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498,215 |
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| Finance costs |
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7 |
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(185 |
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(1,122 |
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(638 |
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(856 |
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| Gain from change in fair value of contingent share liability |
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6 |
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- |
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- |
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- |
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38,645 |
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| PROFIT BEFORE TAX |
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8 |
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15,419 |
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93,343 |
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231,155 |
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536,004 |
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| Tax |
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10 |
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(4,592 |
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(27,801 |
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(32,213 |
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(65,922 |
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| PROFIT FOR THE YEAR |
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10,827 |
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65,542 |
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198,942 |
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470,082 |
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| Other comprehensive income for the year, net of tax: |
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| Items that may be reclassified separately to profit or loss: |
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| Exchange differences on translation of financial statements of overseas subsidiaries |
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| Exchange difference arising during the year |
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64 |
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392 |
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(49 |
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4,042 |
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| Total comprehensive income for the year attributable to equity holders of the Company |
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10,891 |
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65,934 |
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198,893 |
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474,124 |
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| EARNINGS PER SHARE |
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11 |
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| Net profit per share |
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| Basic |
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USD |
0.33 |
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RMB |
1.98 |
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RMB |
6.03 |
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RMB |
15.83 |
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| Diluted |
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USD |
0.33 |
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RMB |
1.98 |
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RMB |
6.03 |
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RMB |
13.72 |
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| Weighted average number of shares outstanding |
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11 |
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| Basic |
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33,081,656 |
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33,081,656 |
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32,997,441 |
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29,700,010 |
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| Diluted |
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33,081,656 |
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33,081,656 |
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32,997,441 |
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34,273,028 |
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Management Discussion and Analysis
Revenue. Although a slow recovery occurred towards the end of 2013, the global macroeconomic environment had remained difficult for much of the year, which had an adverse impact on the Chinese economy and its sportswear industry. In addition, initial forecasts for sports products demand in preceding years proved to be overly optimistic, leading to an industry-wide build-up in inventory levels. In response, most sportswear brands aggressively cleared their excessive inventory. In an effort to maintain our competitive position, pricing power and to manage inventory levels and the efficiency of our distribution network, we enacted a number of strategic initiatives throughout the year. Among others, as all of our products are sold to distributors, we actively engaged our distributors and authorized third party retailers to manage the level of wholesale orders placed with us but not yet manufactured.
In anticipation of weaker consumer demand in 2013, and to prevent a buildup of inventory at distributors, we trimmed our production and delivery activities, resulting in a 31.6% decrease in revenue from RMB2,383.5 million for the year ended December 31, 2012 to RMB1,629.6 million (US$269.2 million) for the year ended December 31, 2013.
· Revenue from footwear decreased by 34.5%, from RMB1,144.8 million for the year ended December 31, 2012 to RMB750.4 million (US$124.0 million) for the year ended December 31, 2013, primarily due to a 32.7% decrease in sales volume and a 2.7% decrease in the average selling price (“ASP”). The decrease in ASP was attributable to the introduction of a range of lower priced footwear products to target the mass market and to better align with customer preferences.
· Revenue from apparel decreased by 28.7%, from RMB1,198.2 million for the year ended December 31, 2012 to RMB854.4 million (US$141.1 million) for the year ended December 31, 2013. This decrease was primarily due to a 42.8% decrease in sales volume, which was partially offset by a 24.6% increase in ASP. The increase in ASP was primarily caused by the improvement of the design and quality of certain of our apparel products to better align with consumer demand. To a lesser extent, the increase in ASP was also attributable to the increase in the proportion of sales of higher priced winter collection. For 2013, higher priced winter collection apparel accounted for 19.6% of the total apparel sales, compared with 9.4% for 2012.
· Revenue from accessories decreased by 38.8%, from RMB40.5 million for the year ended December 31, 2012 to RMB24.8 million (US$4.1 million) for the year ended December 31, 2013. This decrease was primarily caused by the decline in overall sales of our main products.
Profit for the year. As a result of the foregoing, our profit for the year ended December 31, 2013 was RMB65.5 million (US$10.8 million), representing a decrease of 67.1% from RMB198.9 million for the year ended December 31, 2012.
