FINAL RESULTS HIGHLIGHTS FOR THE YEAR ENDED DECEMBER
FINAL RESULTS HIGHLIGHTS FOR THE YEAR ENDED DECEMBER 31, 2006
Group Financial Highlights For the Year Ended December 31, 2006 FY 2006 (HK$M) FY 2005 (HK$M) YOY Change Turnover 4, 372 4, 413 - 0. 9% Gross profit 2, 178 2, 243 - 2. 9% 513 679 - 24. 4% EBITDA Operating profit 376 518 - 27. 4% Profit before tax 391 548 - 28. 6% Profit attributable to shareholders 205 406 - 49. 5% Profit attributable to shareholders excl additional China tax assessment 271 406 - 33. 3% 1 H 06 down 6. 1%, 2 H 06 up 4. 0%. YTD Feb-07 up double-digit. 1 H 06 down 6. 8%, 2 H 06 up 0. 9%. Due to lower gross profit and FY 2006 operating expenses increasing by 5. 0% Amount of additional China tax assessment is HK$66 million 2
Group Financial Highlights For the Year Ended December 31, 2006 FY 2006 (HK cents) FY 2005 (HK cents) YOY Change Earnings per share 13. 8 27. 5 - 49. 8% Earnings per share excl additional China tax assessment 18. 2 27. 5 - 33. 8% Interim (paid) 4. 5 - Special interim (paid) 2. 0 - Final (proposed) 5. 0 - Special final (proposed) 15. 0 - Total for the year 26. 5 - 192. 0% 96. 4% Dividend per share Dividend payout ratio (%) 3
Group Financial Highlights For FY 2002 through FY 2006 4
Group Financial Highlights For the Year Ended December 31, 2006 FY 2006 (HK$ M) FY 2005 (HK$ M) Net cash & bank balances 665 827 Cash inflow from operating activities 306 489 Inventory turnover on sales 35 days 31 days Reduced to 33 days at end-Feb 2007. Capital Expenditure 111 120 HK$120 M to HK$150 M budgeted for 2007 Current ratio (x) 2. 1 X 2. 6 X Gross margin 49. 8% 50. 8% EBITDA margin 11. 7% 15. 4% Operating margin 8. 6% 11. 7% Net margin 4. 7% 9. 2% Down 1. 0% pt due to greater discounting. 6. 2% excluding additional China tax assessment 5
Divisional Highlights For the Year Ended December 31, 2006 Turnover Operating Profit FY 2006 (HK$M) FY 2005 (HK$M) YOY Change Retail & Distribution 4, 019 4, 002 + 0. 4% 334 460 - 27. 4% Garment Trading & Manufacturing 956 1, 043 - 8. 3% 42 58 - 27. 6% (603) (632) - 4. 6% - - - 353 411 -14. 1% - - - 4, 372 4, 413 - 0. 9% 376 518 - 27. 4% Intra-group Sales External Sales Total 6
Giordano Operations Highlights For the Year Ended December 31, 2006 FY 2005 YOY Change Turnover (HK$M) 1 3, 507 3, 487 + 0. 6% YTD Feb-07 sales up double-digit. As % Total Retail Turnover 1 87% Comp Store Sales 1 - 3. 4% - 0. 5% Launched Giodano Concepts. Launched Giordano in India. 5 more stores in 2007. Opened Giordano franchised store in 1, 587 1, 527 + 60 Vancouver in Feb-07. 120 additional stores planned for 2007. 1 Includes Giordano, Giordano Concepts and Giordano Junior Number of Outlets 1 7
Giordano Operations Highlights For the Year Ended December 31, 2006 Giordano Store in Chennai City Centre, India (Opened May-06) Two Giordano Store in India at end-2006. 8
Giordano Operations Highlights For the Year Ended December 31, 2006 Giordano Concepts Store in Mongkok, Hong Kong (Opened Oct-06) 9
Giordano Operations Highlights For the Year Ended December 31, 2006 Giordano Concepts Store in Mongkok, Hong Kong (Opened Oct-06) 10
Giordano Ladies Operations Highlights For the Year Ended December 31, 2006 FY 2005 YOY Change Turnover (HK$M) 208 185 + 12. 4% Sales grew by double-digit in all markets except Taiwan in 2006. YTD Feb-07 sales up doubledigit. As % Total Retail Turnover 5% 5% Comp Store Sales + 8. 1% + 3. 3% Number of Outlets 31 27 +4 5 stores planned for 2007. Launch in Malaysia. 11
Giordano Ladies Operations Highlights For the Year Ended December 31, 2006 Giordano Ladies Store in Xintiandi, Shanghai (Opened Mar-06) 12
Giordano Ladies Operations Highlights For the Year Ended December 31, 2006 Giordano Ladies Store in Xintiandi, Shanghai (Opened Mar-06) 13
Bluestar Exchange Operations Highlights For the Year Ended December 31, 2006 FY 2005 YOY Change Turnover (HK$M) 304 330 - 7. 9% YTD Feb-07 sales down due to weather. As % Total Retail Turnover 8% 8% Comp Store Sales - 6. 8% - 3. 1% BSX re-branding program to Number of Outlets 149 140 +9 begin in Spring 2007 in Hong Kong. 10 - 15 additional stores in 2007. Proposed BSX Store Cashier Concept 14
Bluestar Exchange Operations Highlights For the Year Ended December 31, 2006 Proposed BSX Store Interior Concept 15
Retail & Distribution Turnover by Market For the Year Ended December 31, 2006 Hong Kong 22% (22%) Taiwan 16% (18%) Mainland China 27% (25%) Note: 2005 figures in brackets Singapore 10% (10%) Others 12% (13%) Malaysia 3% (3%) Australia 6% (6%) Indonesia 4% (3%) 16
Retail & Distribution Division Operations Highlights – MAINLAND CHINA For the Year Ended December 31, 2006 Turnover (HK$M) Comp Store Sales Number of Outlets FY 2006 FY 2005 YOY Change 1, 090 987 + 10. 4% + 8. 5% +5. 5 % 729 706 1 H 06 up 1. 7%, 2 H 06 up 18. 2%. YTD Feb-07 up double-digit YOY. 1 H 06 up 7. 2%, 2 H 06 up 9. 7%. + 23 First Giordano Concepts opened in Shanghai Grand Gateway in 1 Q 07. 2 - 3 more planned in selected first-tier cities. Net increase of 50 stores planned, mostly in second-tier cities and inland provinces. 17
Retail & Distribution Division Operations Highlights – HONG KONG For the Year Ended December 31, 2006 FY 2005 YOY Change 1 H 06 1. 9%, 2 H 06 down 0. 4%. Turnover (HK$M) 873 867 + 0. 7% YTD Feb-07 flat YOY. Rising operating costs a concern. Comp Store Sales Number of Outlets + 5. 4% 98 + 4. 4% 101 1 H 06 up 4. 4%, 2 H 06 up 6. 7%. -3 Three Giordano Concepts opened at end 2006, one more opened in Skyplaza in Feb 2007. No net increase in store network planned in 2007. 18
Retail & Distribution Division Operations Highlights – TAIWAN For the Year Ended December 31, 2006 FY 2005 YOY Change 1 H 06 down 17. 6%, 2 H 06 down 1. 5%. Turnover (HK$M) 658 732 - 10. 1% Volatile political situation a concern. YTD Feb-07 flat YOY. Comp Store Sales Number of Outlets - 9. 1% 239 - 5. 8% 237 1 H 06 down 13. 7%, 2 H 06 down 3. 0%. +2 1 – 2 Giordano Concepts stores planned for 2007. Net increase of about 5 stores planned for 2007. 19
Retail & Distribution Division Operations Highlights – SINGAPORE For the Year Ended December 31, 2006 FY 2005 YOY Change 1 H 06 down 7. 3%, 2 H 06 up 7. 6%. Turnover (HK$M) 403 - Upward rental and staff cost pressure. YTD Feb-07 sales about flat YOY. Comp Store Sales - 11. 9% - 1. 2 % Number of Outlets 53 48 1 H 06 down 15. 7%, 2 H 06 down 7. 4%. +5 No net increase in store network planned in 2007. 20
Retail & Distribution Division Operations Highlights – OTHER MARKETS For the Year Ended December 31, 2006 FY 2005 YOY Change Australia 227 222 + 2. 3% Malaysia 120 126 - 4. 8% YTD Feb-07 sales up double-digit YOY. Indonesia 145 139 + 4. 3% YTD Feb-07 sales up single-digit YOY. Thailand 100 91 + 9. 9% YTD Feb-07 sales up double-digit YOY. - 6. 3% Achieved breakeven in 2006. YTD Feb-07 sales down double-digit YOY due to warm weather. Turnover (HK$M) Japan 59 63 YTD Feb-07 sales up double-digit YOY. Net increase of 10 outlets planned for 2007. 21
Retail & Distribution Division Operations Highlights – SOUTH KOREA For the Year Ended December 31, 2006 FY 2005 YOY Change Turnover (HK$M) 1, 014 995 + 1. 9% Comp Store Sales - 6. 5% - 4. 0% Number of Outlets 148 168 YTD Feb-07 sales about flat YOY due to warm weather. 1 H 06 down 9. 6%, 2 H 06 down 2. 1%. - 20 Net increase of 10 stores planned for 2007. 22
Retail & Distribution Division Operations Highlights – MIDDLE EAST For the Year Ended December 31, 2006 FY 2005 YOY Change 359 332 + 8. 1% Comp Store Sales + 1. 6% + 2. 4% Number of Outlets 129 107 Turnover (HK$M) 1 H 06 sales up 18. 6%, 2 H 06 sales flat. YTD Feb-07 sales up double-digit YOY. 1 H 06 up 5. 8%, 2 H 06 down 5. 5%. + 22 Net addition of about 20 stores planned for 2007. 23
Garment Trading & Manufacturing For the Year Ended December 31, 2006 Sales including intra-group sales (HK$M) FY 2006 FY 2005 YOY Change 956 1, 043 - 8. 3% Sales to external customers (HK$M) 353 411 Percentage of Retail & Distribution’s total purchase 25. 7 29. 7 42 58 Operating Profit (HK$M) Operating Margin (%) 4. 4% 5. 6% - 14. 1% External sales decreased to 36. 9% of total divisional sales. YTD Feb-07 external sales up double -digit YOY. - 27. 6% 1 H 06 margin was 4. 2%, 2 H 06 margin was 4. 6%. 2 H 06 margin recovery due to partial relocation of operations to lower cost Northern China. 24
2007 Strategic Initiatives Expansion and upgrade of our product ranges Heavy investment in increasing and upgrading our design and development capabilities 25
2007 Strategic Initiatives New Store Openings and Store Refurbishment Giordano Concepts Store in Grand Gateway, Shanghai (Opened Mar-07) 26
2007 Strategic Initiatives New Store Openings and Store Refurbishment Giordano Concepts Store in Skyplaza, Hong Kong (Opened Mar-07) 27
2007 Strategic Initiatives New Store Openings and Store Refurbishment Giordano Ladies Store in Skyplaza, Hong Kong (Opened Mar-07) 28
2007 Strategic Initiatives New Store Openings and Store Refurbishment Giordano Store in Aberdeen Mall, Vancouver (Opened Feb-07) 29
2007 Strategic Initiatives New Store Openings and Store Refurbishment Giordano Store in Aberdeen Mall, Vancouver (Opened Feb-07) 30
2007 Store Growth Targets Outlets as at Dec 31, 2006 2007 Growth Target Mainland China 729 50 Hong Kong & Singapore 151 - Focus on growing comparable store sales and margins. Taiwan 239 5 Focus on growing comparable store sales and margins. Adjust store portfolio to trade up to better locations. Southeast Asia 249 5 Continued growth of Giordano network. Australia 59 10 Continued roll-out of Giordano and Bluestar Exchange stores. Japan 20 5 Continued growth of Giordano network. South Korea 148 10 Focus on growing comparable store sales and margins. Adjust store portfolio to trade up to better locations. Middle East 127 20 Continued roll-out of Giordano stores. India 2 10 Steady penetration of Indian market with Giordano. Others 43 10 1, 767 120 Total Remarks Focus on growing Giordano retail and franchise network in second tier cities and inland provinces. 31
2007 Strategic Initiatives Increase Advertising & Promotion – Outdoor MAINLAND CHINA Outdoor Advertising at Giordano Shanghai Flagship Store 32
2007 Strategic Initiatives Increase Advertising & Promotion – Outdoor MAINLAND CHINA Outdoor Advertising at Li Wan Plaza, Guangzhou 33
2007 Strategic Initiatives Increase Advertising & Promotion – Print HONG KONG Giordano Spring 2007 Ad Images 34
2007 Strategic Initiatives Increase Advertising & Promotion – Print MAINLAND CHINA Giordano January 2007 Campaign
2007 Strategic Initiatives Increase Advertising & Promotion – Print MAINLAND CHINA Giordano March 2007 Ad Campaign 36
2007 Strategic Initiatives Increase Advertising & Promotion – Sponsorships HONG KONG The 31 st Hong Kong International Film Festival 37
Appendix Giordano Global Retail Network As at December 31, 2006 Giordano & Junior Giordano Ladies Bluestar Exchange Total As at Dec 31, 2005 Australia 57 - 2 59 52 +7 Hong Kong 50 9 39 98 101 -3 Indonesia 78 - 6 84 62 + 22 Japan 20 - - 20 21 -1 South Korea 148 - - 148 168 - 20 Mainland China 684 11 34 729 706 + 23 Malaysia 58 - - 58 53 +5 Middle East 129 - - 129 107 + 22 Philippines 43 - 1 44 43 +1 Singapore 51 2 - 53 48 +5 Taiwan 168 9 62 239 237 +2 Thailand 63 - - 63 57 +6 Others 38 - 5 43 39 +4 1, 587 31 149 1, 767 1, 694 + 73 Number of Outlets Total YTD Change 38
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