XIAMEN, China, March 27, 2012 /PRNewswire-Asia/ -- China Xiniya Fashion Limited ("Xiniya" or the "Company") (NYSE:XNY), a leading provider of men's business casual apparel in China, today reported financial results for the fourth quarter of 2011. The financial statements and other financial information included in this press release have been prepared in conformity with International Financial Reporting Standards ("IFRS").
The Company publishes its financial statements in Renminbi ("RMB").
Fourth Quarter 2011 Highlights
Full Year 2011 Highlights
Recent Developments
Guidance
Mr. Qiming Xu, Chairman and Chief Executive Officer, commented, "We are pleased to report another strong quarter and solid full-year financial and operational results. We concluded our first year as a public company having achieved many of the accomplishments we set out for ourselves. Most importantly, we delivered on our stated revenue and gross margin guidance while we strengthened our brand equity though investments in marketing and advertising. Our advertising campaigns on CCTV-2, CCTV-5 and CCTV-12 were particularly successful along with the opening of our new flagship store in Quanzhou, Fujian Province in November 2011. I am very optimistic about Xiniya's business momentum as we execute on our strategic objectives in 2012 to build the foundation for a sustainable growth plan during the current year and beyond."
Fourth Quarter 2011 Results
Revenue for the fourth quarter of 2011 was RMB482.8 million, compared with revenue of RMB333.6 million for the fourth quarter of 2010, which represents a 44.7% increase. Approximately 7% or RMB23.3 million of the revenue increase was attributed to the goods-in-transit recorded during the third quarter of 2011, which were delivered and recognized in the fourth quarter of 2011. The total retail outlet count as of December 31, 2011 was 1,607. The table below sets forth the number of retail outlets by outlet type.
Outlet Type: |
| As of December | As of December |
Company-operated flagship stores | 1 | 2 | |
Managed by distributors | 68 | 96 | |
Distributor-operated flagship stores | - | 3 | |
Managed by department store chains | 326 | 317 | |
Managed by authorized retailers | 1,009 | 1,189 | |
Total outlet count | 1,404 | 1,607 |
Gross profit increased 41.8% to RMB169.6 million in the fourth quarter of 2011 from RMB119.6 million in the fourth quarter of 2010. Gross margin was 35.1% in the fourth quarter of 2011 as compared with 35.9% in the fourth quarter of 2010. The decrease was mainly attributable to the increase in sales rebates to distributors due to the restructuring of the Company's authorized retail network completed in 2010. As a result of the restructuring, beginning in 2011, department store chains have been managed and supervised by distributors and purchase products from distributors instead of directly from the Company, which has increased the purchases attributed to distributors and thus the total amount of rebates as a fixed percentage of purchases.
Interest and other income was RMB6.9 million in the fourth quarter of 2011 as compared to RMB236,000 in the fourth quarter of 2010. The increase was mainly due to an increase in interest income of RMB4.2 million, arising from time deposits placed with banks, and an exchange gain of RMB2.4 million.
Selling and distribution expenses in the fourth quarter of 2011 increased to RMB17.4 million from RMB3.0 million in the fourth quarter of 2010 due to an increase in advertising and promotional expenses, rack expenses for authorized retail outlets and new flagship store expenses. Advertising and promotional expenses were RMB8.8 million, or 1.8%, of revenue in the fourth quarter of 2011, compared with RMB1.1 million, or 0.3%, of revenue in the fourth quarter of 2010. These higher expenses were primarily due to advertising on the Chinese national television channels CCTV-2 and CCTV-12. Since July 2011, as part of the Company's overall strategy to unify the image of its authorized retail outlets, the Company has been paying for shop racks for authorized retail outlets opened on or after July 2011. These expenses were RMB4.7 million, or 1.0%, of revenue in the fourth quarter of 2011. Flagship store expenses were RMB0.9 million in the fourth quarter of 2011 arising from our new flagship opened in November 2011.
Administrative expenses rose to RMB9.1 million in the fourth quarter of 2011 from RMB6.1 million in the fourth quarter of 2010, due to an increase in the number of administrative staff and related salaries along with the costs associated with being a public company.
Profit before taxation of RMB150.0 million in the fourth quarter of 2011 represented an increase of 35.4% compared with RMB110.8 million in the fourth quarter of 2010.
Income tax expense in the fourth quarter of 2011 was RMB37.5 million, which resulted in an effective tax rate of 25.0%. This compares with income tax expense of RMB14.0 million and an effective tax rate of 12.6% in the fourth quarter of 2010. The increase is due to the expiration of the Company's preferential PRC tax treatment at the end of 2010.
Profit for the fourth quarter of 2011 was RMB112.5 million, compared with RMB96.9 million in the fourth quarter of 2010. Earnings per ADS were $0.31 in the fourth quarter of 2011, compared to $0.27 per ADS in the fourth quarter of 2010.
Financial Position
As of December 31, 2011, the Company had trade receivables of RMB335.2 million arising entirely from sales during the fourth quarter of 2011. Trade receivables outstanding as of September 30, 2011 have been fully collected as of December 31, 2011.
Other receivables and prepayments and other payables and accruals at December 31, 2011 increased compared to balances at December 31, 2010, primarily due to prepayments to suppliers amounting to RMB78.6 million, which prepayments were funded primarily by deposits and prepayments amounting to RMB98.2 million collected from distributors for September 2011 sales fair orders. These prepayments to suppliers are for goods to be delivered to the Company during the first half of 2012. The Company will deliver the goods received from suppliers to its distributors over the same period. This process enables the Company's suppliers to procure raw materials in advance so as to meet the Company's planned delivery schedule.
Conference Call
Xiniya will host a conference call and live webcast at 8 a.m. Eastern Daylight Time (EDT) / 8 p.m. Beijing time on March 27, 2012.
The dial-in details for the live conference call are as follows:
- Participant Dial-In (Toll Free USA): 1-866-519-4004
- International Dial In: 1-718-354-1231
- China Domestic Mobile: 400-620-8038
- China Domestic: 800-819-0121
- Hong Kong Toll Free: 800930346
Conference ID: XNY
A live webcast of the conference call will be available in the investor relations section of the Company's website at: http://ir.xiniya.com.
A telephone replay of the call will be available 1 hour after the end of the conference through April 3, 2012 at 11:59 p.m. EDT.
The dial-in details for the replay are as follows:
U.S. Toll Free Number: 1-866-214-5335
International dial-in number: 1-718-354-1232
Conference ID: 61658169
Safe Harbor Statement
This news release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "target," "going forward," "outlook" and similar statements. Such statements are based upon management's current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the Company's control, which may cause the Company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under law.
Exchange Rate Information
The United States dollar ($) amounts disclosed in this press release are presented solely for the convenience of the reader. Translations of amounts from RMB into United States dollars for the convenience of the reader were calculated at the certified exchange rate of $1.00 = RMB6.2939 on December 31, 2011 as set forth in the H.10 weekly statistical release of the Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted into $ at that rate on December 31, 2011, or at any other date. The percentages stated are calculated based on RMB amounts.
About China Xiniya Fashion Limited
Xiniya is a leading provider of men's business casual apparel in China. The Company designs and manufactures men's business casual and business formal apparel and accessories, which are marketed under the Xiniya brand, and sells through its distribution network that includes 28 distributors. Its products are sold to consumers at over 1,500 authorized retail outlets owned and managed by third parties located in 21 provinces, five autonomous regions, and four municipalities in China. This retail network focuses on second and lower-tier cities, where increasing affluence has led to an improvement in living standards and where most international men's apparel brands do not have a significant presence. The Company's target consumers are male working professionals in China between the ages of 25 and 45 who seek fashionable clothing to suit their working and lifestyle needs. For more information, please visit the Company's website at http://ir.xiniya.com.
For additional information, please contact:
China Xiniya Fashion Limited
Chee Jiong Ng
Chief Financial Officer
Telephone: +86-1365-5939-932
Email: ngcheejiong@xiniya.com
Christensen
Kimberly Minarovich
Telephone: +1-212-542-0795 in New York
Email: kminarovich@christensenir.com
Or
Christian Arnell
Phone: +86-10-5826-4939 in Beijing
Email: carnell@christensenir.com
CHINA XINIYA FASHION LIMITED
| |||||||||||
| Three months ended December 31 |
| Twelve months ended December 31 | ||||||||
| 2010 RMB |
| 2011 RMB |
| 2011 USD |
| 2010 RMB |
| 2011 RMB |
| 2011 USD |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue | 333,556 |
| 482,763 |
| 76,703 |
| 899,252 |
| 1,180,036 |
| 187,489 |
Cost of sales | (213,957) |
| (313,161) |
| (49,756) |
| (589,233) |
| (775,137) |
| (123,157) |
Gross profit | 119,599 |
| 169,602 |
| 26,947 |
| 310,019 |
| 404,899 |
| 64,332 |
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income | 236 |
| 6,909 |
| 1,098 |
| 847 |
| 24,616 |
| 3,911 |
Selling and distribution expenses | (2,964) |
| (17,406) |
| (2,766) |
| (11,999) |
| (72,154) |
| (11,464) |
Administrative expenses | (6,055) |
| (9,137) |
| (1,452) |
| (10,108) |
| (23,267) |
| (3,697) |
Profit before taxation | 110,816 |
| 149,968 |
| 23,827 |
| 288,759 |
| 334,094 |
| 53,082 |
Income tax expense | (13,957) |
| (37,508) |
| (5,959) |
| (36,413) |
| (82,386) |
| (13,090) |
Profit for the period | 96,859 |
| 112,460 |
| 17,868 |
| 252,346 |
| 251,708 |
| 39,992 |
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income for the period: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange differences on translation of financial statements | - |
| (3,634) |
| (577) |
| - |
| (18,536) |
| (2,945) |
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the period | 96,859 |
| 108,826 |
| 17,291 |
| 252,346 |
| 233,172 |
| 37,047 |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share - basic and diluted (in RMB) | 0.45 |
| 0.49 |
| - |
| 1.24 |
| 1.09 |
| - |
Earnings per ADS - basic and diluted (in USD) | 0.27 |
| - |
| 0.31 |
| 0.47 |
| - |
| 0.69 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding in the period ('000) | 213,565 |
| 231,449 |
| 231,449 |
| 203,419 |
| 231,844 |
| 231,844 |
Weighted average ADS outstanding in the period ('000) | 53,391 |
| 57,862 |
| 57,862 |
| 50,854 |
| 57,961 |
| 57,961 |
|
|
|
|
|
|
|
|
|
|
|
|
One ADS represents four ordinary shares. |
|
|
|
|
|
|
|
|
|
|
|
CHINA XINIYA FASHION LIMITED
| |||||
| As at |
| As at | ||
| 2010 |
| 2011 |
| 2011 |
| RMB |
| RMB |
| USD |
|
|
| Unaudited |
| Unaudited |
Assets |
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Property, plant and equipment | 1,642 |
| 17,662 |
| 2,806 |
Deposit for land use right | - |
| 8,854 |
| 1,407 |
Other receivables and prepayments | 5,018 |
| 674 |
| 107 |
Total non-current assets | 6,660 |
| 27,190 |
| 4,320 |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
Cash and cash equivalents | 862,797 |
| 1,031,930 |
| 163,957 |
Trade receivables | 221,356 |
| 335,152 |
| 53,250 |
Inventories | 5,658 |
| 3,908 |
| 621 |
Other receivables and prepayments | 5,054 |
| 93,152 |
| 14,801 |
Total current assets | 1,094,865 |
| 1,464,142 |
| 232,629 |
|
|
|
|
|
|
Total assets | 1,101,525 |
| 1,491,332 |
| 236,949 |
|
|
|
|
|
|
Equity and liabilities |
|
|
|
|
|
Equity |
|
|
|
|
|
Share capital | 77 |
| 77 |
| 12 |
Additional paid-in capital | 529,650 |
| 526,818 |
| 83,703 |
Statutory reserve | 69,351 |
| 94,067 |
| 14,946 |
Foreign currency translation differences | - |
| (18,536) |
| (2,945) |
Retained earnings | 403,754 |
| 631,569 |
| 100,346 |
Total equity | 1,002,832 |
| 1,233,995 |
| 196,062 |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Trade payables | 46,358 |
| 83,630 |
| 13,288 |
Other payables and accruals | 38,378 |
| 136,199 |
| 21,640 |
Current income tax payable | 13,957 |
| 37,508 |
| 5,959 |
Total current liabilities | 98,693 |
| 257,337 |
| 40,887 |
|
|
|
|
|
|
Total equity and liabilities | 1,101,525 |
| 1,491,332 |
| 236,949 |
CHINA XINIYA FASHION LIMITED
| |||||
| Twelve months ended December 31 | ||||
| 2010 |
| 2011 |
| 2011 |
| RMB |
| RMB |
| USD |
Cash flows from operating activities: |
|
|
|
|
|
Profit before taxation | 288,759 |
| 334,094 |
| 53,082 |
Adjustments for: |
|
|
|
|
|
Depreciation of property, plant and equipment | 389 |
| 1,646 |
| 261 |
Loss on disposal of property, plant and equipment | 351 |
| - |
| - |
Interest income | (847) |
| (14,445) |
| (2,295) |
Foreign exchange gains | - |
| (8,969) |
| (1,425) |
Interest expense | - |
| 968 |
| 154 |
Share-based compensation | 2,195 |
| 823 |
| 131 |
Operating profit before working capital changes | 290,847 |
| 314,117 |
| 49,908 |
Increase in trade receivables | (93,537) |
| (113,796) |
| (18,080) |
Decrease in inventories | 5,360 |
| 1,750 |
| 278 |
Increase in other receivables and prepayments | (8,400) |
| (76,826) |
| (12,207) |
Increase in trade payables | 18,341 |
| 37,272 |
| 5,922 |
Increase in other payables and accruals | 12,472 |
| 105,559 |
| 16,772 |
Cash generated by operating activities | 225,083 |
| 268,076 |
| 42,593 |
Interest paid | - |
| (968) |
| (154) |
Income tax paid | (34,354) |
| (58,835) |
| (9,348) |
Net cash generated by operating activities | 190,729 |
| 208,273 |
| 33,091 |
Cash flows from investing activities: |
|
|
|
|
|
Proceeds from the disposal of property, plant and equipment |
396 |
|
- |
|
- |
Acquisition of property, plant and equipment | (2) |
| (17,666) |
| (2,806) |
Deposit for land use right | - |
| (8,854) |
| (1,407) |
Interest received | 847 |
| 7,517 |
| 1,194 |
Net cash generated by/(used in) investing activities | 1,241 |
| (19,003) |
| (3,019) |
Cash flows from financing activities: |
|
|
|
|
|
Proceeds from share issued, net | 519,884 |
| - |
| - |
Increase/(decrease) in advance to and from director | 8,641 |
| (7,738) |
| (1,229) |
Proceeds from short-term bank loans | - |
| 165,000 |
| 26,216 |
Repayments of short-term bank loans | - |
| (165,000) |
| (26,216) |
Purchase of treasury shares | - |
| (2,832) |
| (450) |
Net cash generated by/(used in) financing activities | 528,525 |
| (10,570) |
| (1,679) |
|
|
|
|
|
|
Net increase in cash and cash equivalents | 720,495 |
| 178,700 |
| 28,393 |
Cash and cash equivalents at beginning of the period | 142,302 |
| 862,797 |
| 137,084 |
Exchange losses on cash and cash equivalents | - |
| (9,567) |
| (1,520) |
Cash and cash equivalents at end of the period | 862,797 |
| 1,031,930 |
| 163,957 |