Net profit up 41.8% year-over-year to RMB351.6 million
FUJIAN, China, April 5, 2011 /PRNewswire-Asia-FirstCall/ -- Exceed Company Ltd. (NASDAQ: EDS) ("Exceed" or "the Company"), the owner and operator of "Xidelong" brand – one of the leading domestic sportswear brands in China, today released its financial results for the fourth quarter and full year ended December 31, 2010.
Financial Highlights – Fourth Quarter ended December 31, 2010 (unaudited)
Financial Highlights – Full Year ended December 31, 2010 (audited)
Mr. Shuipan Lin, Exceed's founder, Chairman and CEO, commented, "We are pleased to report a strong top- and bottom-line performance for the fourth quarter and full year 2010, supported by continued execution of our strategy to develop and enhance our brand, our products and our sales channels. Our results demonstrate the success of our 'happy lifestyle' brand positioning, which has helped us to gain traction among a wide range of consumers, including the younger generation, which represent the fastest growing segment of the sportswear market in China. This growing brand recognition, coupled with the expansion of our product offering, has resulted in increased customer demand and higher average selling price ("ASP") of our products.
"The strong demand from consumers has supported the continued expansion of the Xidelong retail network, as reflected by the increase in both the number and size of retail stores in 2010. In addition, we have continued to broaden our geographical footprint, especially within the rapidly growing third-tier cities in China, which will enable us to capture the opportunities from the rising disposable income in these regions.
"Our strong performance in 2010 and the increased demand for our products, as demonstrated by the orders placed for our products in our recent 2011 autumn sales fair, indicate continued opportunities for growth. We will aim to capitalize on these opportunities by executing our proven strategy, focusing on cost controls and increasing brand awareness, which we believe will allow us to continue our revenue and income growth in the year ahead."
Unaudited Fourth Quarter and Audited Fiscal Year 2010 Financial Results Revenue breakdown |
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Quarter Ended |
|||||||
Dec 31, 2010 USD'000 |
Dec 31, 2010 RMB'000 |
% of Revenue |
Dec 31, 2009 RMB'000 |
% of Revenue |
Fourth Quarter YoY Growth |
||
Footwear |
42,439 |
280,095 |
42.7% |
310,717 |
51.8% |
-9.9% |
|
Apparel |
55,675 |
367,455 |
56.0% |
277,916 |
46.4% |
32.2% |
|
Accessories |
1,278 |
8,437 |
1.3% |
10,777 |
1.8% |
-21.7% |
|
Total |
99,392 |
655,987 |
100.0% |
599,410 |
100.0% |
9.4% |
|
Year Ended |
|||||||
Dec 31, 2010 USD'000 |
Dec 31, 2010 RMB'000 |
% of Revenue |
Dec 31, 2009 RMB'000 |
% of Revenue |
Fiscal Year YoY Growth |
||
Footwear |
191,876 |
1,266,378 |
46.9% |
1,102,280 |
53.0% |
14.9% |
|
Apparel |
212,683 |
1,403,708 |
52.0% |
948,738 |
45.7% |
48.0% |
|
Accessories |
4,364 |
28,805 |
1.1% |
26,940 |
1.3% |
6.9% |
|
Total |
408,923 |
2,698,891 |
100.0% |
2,077,958 |
100.0% |
29.9% |
Revenue for 2010 was RMB2,698.9 million (US$408.9 million), representing a year-over-year increase of 29.9% from RMB2,078.0 million in 2009.
The increase in revenue in the fourth quarter and full year was primarily driven by results from the new advertising and promotional campaign, as well as the successful launch of a new series of apparel and footwear products. Beginning in 2010, we have used the phrase "happy lifestyle" as the main theme in our Xidelong brand promotional activities and product offerings. The strong demand from consumers encouraged the expansion of the Xidelong retail network by our distributors. In the fourth quarter of 2010, 139 Xidelong retail stores were opened, compared to 57 Xidelong retail stores opened in the same period of 2009. For the full year, the number of the Xidelong retail stores increased by 639 from 3,694 as of December 31, 2009 to 4,333 as of December 31, 2010.
Gross profit for 2010 increased by 37.3% to RMB841.6 million (US$127.5 million) from RMB613.1 million in the fiscal year 2009, primarily as a result of the increase in sales. Gross margin for 2010 was increased to 31.2% from 29.5% in the fiscal year 2009. The increase in gross margin for the fourth quarter and full year was primarily due to the increase in the ASP of our footwear and apparel products. The successful new advertising and promotion campaign that we initiated in 2010 has enhanced our brand recognition, allowing us to offer more lifestyle apparel products at higher prices. In addition, a portion of our footwear products were manufactured in-house, and cost controls within our footwear production process improved, further enhancing the overall gross margin in these periods.
Other income and gains. Other income and gains decreased by 78.0% to RMB1.2 million (US$179,000) for the fourth quarter of 2010 from RMB5.4 million for the same period in 2009. In 2009, we recorded a gain from the reversal of over-provision for aborted IPO expenses of RMB5.1 million for the fourth quarter in 2009. No similar gain was recorded in the fourth quarter of 2010, during which other income and gains consisted solely of bank interest income.
Other income and gains increased by 8.5% to RMB6.4 million (US$1.0 million) in the fiscal year 2010 from RMB5.9 million in the fiscal year 2009. Other income and gains in 2010 included an award of RMB4.1 million (US$0.6 million) from the Jinjiang local government for our successful listing on the NASDAQ and interest income of RMB2.4 million (US$0.4 million). In 2009, we recorded a gain from the reversal of over-provision for aborted IPO expenses of RMB5.1 million in the fiscal year 2009. No similar gain was recorded in the fiscal year 2010.
Operating expenses. Total operating expenses for the fourth quarter of 2010 was RMB113.5 million (US$17.2 million), an increase of approximately 13.8% from RMB99.7 million for the same period in 2009. Total operating expenses for the fiscal year 2010 was RMB438.2 million (US$66.4 million), increased by approximately 29.8% from RMB337.6 million for the same period in 2009.
Administrative expenses for 2010 was RMB57.8 million (US$8.8 million), an increase of 29.9% from RMB44.5 million in the fiscal year 2009, primarily due to an increase in share-based compensation expense, legal and consulting fees and other professional fees after the NASDAQ listing and salaries of administrative staff, which was partially offset by a decrease in listing expenses.
Finance costs. Finance costs for the fourth quarter of 2010 was RMB243,000 (US$37,000), a decrease of 92.0% from RMB3.1 million for the same period in 2009.
Finance costs for 2010 was RMB1.9 million (US$0.3 million), a decrease of 93.6% from RMB29.6 million in the fiscal year 2009, primarily due to preferred shares issued to Elevatech on March 28, 2008, which carried an interest rate of 12%, were redeemed at the time of our business combination in late 2009.
Profit before tax. As a result of the foregoing, profit before tax for the fourth quarter of 2010 was RMB85.9 million (US$13.0 million), an increase of 5.3% from RMB81.5 million for the same period in 2009. Profit before tax for 2010 was RMB407.9 million (US$61.8 million), an increase of 62.0% from RMB251.8 million in the fiscal year 2009.
Tax. Tax expenses were RMB12.9 million (US$2.0 million), compared to RMB1.3 million for the fourth quarter in 2009. The effective tax rate for the fourth quarter of 2009 and 2010 were 1.6% and 15.0%, respectively.
Tax expenses for 2010 were RMB56.3 million (US$8.5 million), compared to RMB3.8 million in the fiscal year 2009. The increase in fourth quarter and full year tax expenses was primarily because the full exemption period of Xidelong (China) Co. Ltd., our principal PRC subsidiary, from PRC corporate income tax expired on December 31, 2009. Xidelong (China) Co. Ltd. is entitled to a 50% reduction in the PRC corporate income tax until December 31, 2012, after which it will be subject to the standard tax rate of 25%. The effective tax rate for 2009 and 2010 were 1.5% and 13.8%, respectively.
Profit. As a result of the above factors, profit for the fourth quarter of 2010 was RMB73.0 million (US$11.1 million), a decrease of 9.0% from RMB80.2 million for the same period in 2009.
Profit for 2010 was RMB351.6 million (US$53.3 million), an increase of 41.8% from RMB248.0 million in the fiscal year 2009.
Balance Sheet
Inventory. The average inventory turnover days for the fourth quarter of 2010 and 2009 were 13 days and 16 days, respectively. The average inventory turnover days for the fiscal year 2010 and 2009 were 10 days and 18 days, respectively. Inventory turnover days decreased mainly due to better production planning, procurement control and logistics management.
Trade receivables. The average trade receivables turnover days for the fourth quarter of 2010 and 2009 were 84 days and 109 days, respectively. The average trade receivables turnover days for the fiscal year 2010 and 2009 were 96 days. We have reviewed and tightened our credit control policy in 2010, as a result, the trade receivables balance decreased to RMB611.7 million as of December 31, 2010, from RMB812.7 million as of December 31, 2009. We will continue our efforts to maintain tight control on trade receivables balance.
Trade payables. The average trade payables turnover days for the fourth quarter of 2010 and 2009 were 24 days and 55 days, respectively. The average trade payables turnover days for the fiscal year 2010 and 2009 were 30 days and 40 days, respectively. Average trade payables turnover days decreased as a result of our decision to opt for the bulk purchase discounts offered by our suppliers in exchange for quicker payment for raw materials and products.
Cash and bank balances and pledged time deposits. Cash and bank balances and pledged time deposits increased to RMB762.8 million (US$115.6 million) as of December 31, 2010 from RMB655.7 million (US$99.3 million) as of September 30, 2010, and from RMB277.2 million (US$42.0 million) as of December 31, 2009, primarily as a result of shorter payment time from our distributors.
Cash Flow
Cash inflow from operations for the fourth quarter of 2010 was RMB116.8 million (US$17.7 million) compared to an outflow of RMB174.6 million for the same period in 2009.
Cash inflow from operations for 2010 was RMB538.5 million (US$81.6 million) compared to an outflow of RMB155.7 million in the fiscal year 2009. The changes were mainly due to revenue growth as well as improvement on trade receivables with shorter payment time from our distributors.
Business Highlights and Outlook
First Quarter Fiscal 2011 Guidance
Exceed expects to generate net revenues in the range of RMB718.0 million to RMB729.4 million in the first quarter of 2011, representing an approximately year-over-year increase of 26% to 28%, as compared with RMB569.8 million in the same period of 2010. This represents the Company's preliminary estimates, and is subject to change.
Investor Conference Call / Webcast Details
The Company's senior management will host a conference call on Wednesday, April 6, 2011 at 5:00 am (US Pacific) / 8:00 am (US Eastern) / 8:00 pm (Beijing) to discuss the Company's fiscal year 2010 financial results and recent business activity. The conference call may be accessed by dialing:
Toll Free |
Toll |
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1 866 519 4004 |
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800 819 0121 |
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400 620 8038 |
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800 930 346 |
852 2475 0994 |
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0808 234 6646 |
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1 718 354 1231 |
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Participant Passcode "EDS" |
A replay of the conference call may be accessed by phone at the following numbers until Wednesday, April 13, 2011:
Toll Free |
Toll |
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1 866 214 5335 |
1 718 354 1232 |
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10800 714 0386 / 10800 140 0386 |
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800 901 596 |
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0800 731 7846 |
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Participant Passcode 51667350 |
About Exceed Company Ltd.
Exceed Company Ltd. designs, develops and engages in wholesale of footwear, apparel and accessories under its own brand, XIDELONG, in China. Since it began operations in 2002, Exceed has targeted its growth on the consumer markets in the second and third-tier cities in China. Exceed has three principal categories of products: (i) footwear, which comprises running, leisure, basketball, skateboarding and canvas footwear, (ii) apparel, which mainly comprises sports tops, pants, jackets, track suits and coats, and (iii) accessories, which mainly comprise bags, socks, hats and caps. Exceed Company Ltd. currently trades on Nasdaq under the symbols "EDS", "EDSWW" and "EDSUU".
Safe Harbor Statement
This announcement contains forward-looking statements that are based on our current expectations, assumptions, estimates and projections about us and our industry. All statements other than statements of historical fact in this form are forward-looking statements. These forward-looking statements can be identified by words or phrases such as "may", "will", "expect", "anticipate", "estimate", "plan", "believe", "is/are likely to" or other similar expressions.
These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, we cannot assure you that our expectations will turn out to be correct. Our actual results could be materially different from and worse than our expectations. A number of factors could cause actual results to differ materially from those contained in these forward-looking statements, including but not limited to changes in our goals and strategies, our ability to control costs and expenses, success of our products, competition in the sportswear industry in China, and changes in PRC government preferential tax treatment and financial incentives. The forward-looking statements made in this announcement relate only to events or information as of the date on which this announcement is published. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date this announcement is published or to reflect the occurrence of unanticipated events.
Contacts: |
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Taylor Rafferty (HK): |
Taylor Rafferty (US): |
EXCEED COMPANY LTD. AND SUBSIDIARIES CONDENSED STATEMENTS OF COMPREHENSIVE INCOME |
||||||||||||
Year ended December 31 |
Three months ended December 31 |
|||||||||||
2010 |
2010 |
2009 |
2010 |
2010 |
2009 |
|||||||
US$'000 |
RMB'000 |
RMB'000 |
US$'000 |
RMB'000 |
RMB'000 |
|||||||
(Audited) |
(Audited) |
(Audited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
|||||||
Revenue |
408,923 |
2,698,891 |
2,077,958 |
99,392 |
655,987 |
599,410 |
||||||
Cost of sales |
(281,402) |
(1,857,251) |
(1,464,856) |
(69,328) |
(457,565) |
(420,490) |
||||||
Gross profit |
127,521 |
841,640 |
613,102 |
30,064 |
198,422 |
178,920 |
||||||
Other income and gains |
972 |
6,416 |
5,855 |
179 |
1,183 |
5,366 |
||||||
Selling and distribution costs |
(51,460) |
(339,637) |
(268,123) |
(12,283) |
(81,065) |
(80,684) |
||||||
Administrative expenses |
(8,760) |
(57,814) |
(44,509) |
(3,483) |
(22,993) |
(14,098) |
||||||
Research and development expenses |
(6,179) |
(40,783) |
(24,953) |
(1,429) |
(9,432) |
(4,924) |
||||||
OPERATING PROFIT |
62,094 |
409,822 |
281,372 |
13,048 |
86,115 |
84,580 |
||||||
Finance costs |
(287) |
(1,893) |
(29,566) |
(37) |
(243) |
(3,051) |
||||||
Share of loss in jointly-controlled entity |
(3) |
(17) |
(16) |
- |
- |
(16) |
||||||
PROFIT BEFORE TAX |
61,804 |
407,912 |
251,790 |
13,011 |
85,872 |
81,513 |
||||||
Tax |
(8,526) |
(56,274) |
(3,771) |
(1,950) |
(12,871) |
(1,300) |
||||||
PROFIT FOR THE YEAR/PERIOD |
53,278 |
351,638 |
248,019 |
11,061 |
73,001 |
80,213 |
EXCEED COMPANY LTD. AND SUBSIDIARIES CONDENSED STATEMENTS OF FINANCIAL POSITION |
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As of |
||||||||||
As of December 31 |
September 30 |
|||||||||
2010 |
2010 |
2009 |
2010 |
|||||||
US$'000 |
RMB'000 |
RMB'000 |
RMB'000 |
|||||||
(Audited) |
(Audited) |
(Audited) |
(Unaudited) |
|||||||
NON-CURRENT ASSETS |
||||||||||
Property, plant and equipment |
39,994 |
263,958 |
272,578 |
265,119 |
||||||
Prepaid land lease payments |
4,333 |
28,599 |
29,347 |
28,786 |
||||||
Deposit paid for acquisition of land use rights |
1,909 |
12,600 |
- |
12,000 |
||||||
Total non-current assets |
46,236 |
305,157 |
301,925 |
305,905 |
||||||
CURRENT ASSETS |
||||||||||
Inventories |
6,780 |
44,747 |
55,966 |
85,606 |
||||||
Trade receivables |
92,676 |
611,660 |
812,747 |
585,921 |
||||||
Prepayments, deposits and other receivables |
2,998 |
19,788 |
19,840 |
33,484 |
||||||
Due from a shareholder |
- |
- |
103 |
- |
||||||
Pledged bank deposits |
- |
- |
15,000 |
- |
||||||
Cash and bank balances |
115,575 |
762,798 |
262,204 |
655,704 |
||||||
Total current assets |
218,029 |
1,438,993 |
1,165,860 |
1,360,715 |
||||||
CURRENT LIABILITIES |
||||||||||
Trade and bills payables |
16,819 |
111,001 |
195,538 |
122,932 |
||||||
Deposits received, other payables and accruals |
9,936 |
65,585 |
62,842 |
50,723 |
||||||
Interest-bearing bank borrowings |
2,727 |
18,000 |
58,000 |
18,000 |
||||||
Due to a director |
- |
- |
1,687 |
- |
||||||
Tax payable |
1,948 |
12,858 |
1,286 |
16,637 |
||||||
Total current liabilities |
31,430 |
207,444 |
319,353 |
208,292 |
||||||
NET CURRENT ASSETS |
186,599 |
1,231,549 |
846,507 |
1,152,423 |
||||||
Net assets |
232,835 |
1,536,706 |
1,148,432 |
1,458,328 |
||||||
STOCKHOLDER'S EQUITY |
||||||||||
Share capital |
3 |
17 |
13 |
17 |
||||||
Retained profits |
137,085 |
904,761 |
590,226 |
840,050 |
||||||
Reserves |
95,747 |
631,928 |
558,193 |
618,261 |
||||||
Total equity |
232,835 |
1,536,706 |
1,148,432 |
1,458,328 |
COMPANY LTD. AND SUBSIDIARIES CONDENSED STATEMENTS OF CASH FLOWS |
||||||||||||
Year ended December 31 |
Three months ended December 31 |
|||||||||||
2010 |
2010 |
2009 |
2010 |
2010 |
2009 |
|||||||
US$'000 |
RMB'000 |
RMB'000 |
US$'000 |
RMB'000 |
RMB'000 |
|||||||
(Audited) |
(Audited) |
(Audited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
|||||||
Net cash inflow/(outflow) from operating activities |
81,594 |
538,516 |
(155,747) |
17,694 |
116,780 |
(174,564) |
||||||
Net cash outflow from investing activities |
(2,830) |
(18,676) |
(1,563) |
(415) |
(2,736) |
(61) |
||||||
Net cash inflow/(outflow) from financing activities |
(2,520) |
(16,633) |
299,878 |
(843) |
(5,567) |
230,765 |
||||||
Effect of exchange rate changes |
(397) |
(2,613) |
(432) |
(210) |
(1,383) |
(418) |
||||||
Net increase in cash and cash equivalents |
75,847 |
500,594 |
142,136 |
16,226 |
107,094 |
55,722 |
||||||
Cash at beginning of the year/period |
39,728 |
262,204 |
120,068 |
99,349 |
655,704 |
206,482 |
||||||
Cash at end of the year/period |
115,575 |
762,798 |
262,204 |
115,575 |
762,798 |
262,204 |