CHINA XINIYA FASHION LTD (ADR) 
By XIAMEN, FUJIAN, China, April 16, 2014 /PRNewswire/ -- 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 and for the full year 2013. 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 2013 Highlights
-- Revenue during the fourth quarter of 2013 decreased 8.6% to RMB486.9
million, from RMB532.5 million in the fourth quarter of 2012; within the
prior guidance range of (12)% to (8)%.
-- Gross margin was 29.4% in the fourth quarter of 2013 as compared to
33.3% in the fourth quarter of 2012.
-- Net profit in the fourth quarter of 2013 decreased by 11.9% to RMB49.0
million, from RMB55.6 million in the fourth quarter of 2012.
-- Earnings per ADS were $0.14 in the fourth quarter of 2013 as compared to
$0.16 per ADS in the fourth quarter of 2012; exceeded the prior guidance
range of $0.05 to $0.09 per ADS.
-- Xiniya's network of authorized retailers had a net reduction of 52
retail outlets in the fourth quarter of 2013; consisting of 43 new
retail outlets opened, and 94 retail outlets and one flagship outlet
closed. As of December 31, 2013 the total number of authorized retail
outlets was 1,583.
Full Year 2013 Highlights
-- Total revenue in 2013 decreased by 4.5% to RMB1.32 billion, as compared
to RMB1.38 billion in 2012.
-- Net profit in 2013 decreased by 44.6% to RMB97.2 million, as compared to
RMB175.5 million in 2012.
-- Earnings per ADS were $0.28 in 2013, as compared to $0.49 in 2012.
-- A net total of 127 retail outlets were closed during the full year of
2013, consisting of 213 new retail outlets opened, and 338 retail
outlets and two flagship outlets closed.
Recent developments
-- The Company will hold its Fall/Winter Collection Sales Fair in mid April
2014, in Xiamen City, Fujian Province. During the sales fair, the
Company's distributors and authorized retailers will view the newest
collection and place their orders. The Company will deliver the orders
to its distributors primarily during the second half of 2014, upon which
the distributors will then either deliver these products to their
authorized retailers or sell them in their own retail outlets.
Guidance
-- Revenue in RMB for the first quarter of 2014 is expected to decrease by
11% to 7% compared to the first quarter of 2013.
-- Earnings per ADS in the first quarter of 2014 are expected to be in the
range of $0.03 to $0.07.
"The softening of China's economy, menswear industry and the resulting increase in competition directly impacted our operational and financial performance throughout the year," commented Mr. Qiming Xu, Xiniya's Chairman and Chief Executive Officer. "The situation gradually worsened during the year reaching what I believe the market may be the bottoming soon in 2014. While the industry overall remains depressed, sentiment among our staff, distributors and authorized retailers continues to improve due in part to the confidence they place in our strategy and initiatives."
"As the market has shifted and evolved, we have focused on the core strengths that give us an advantage by implementing a number of initiatives that will allow us to weather these difficult times and will ensure our future sustainable growth. These initiatives have been segmented into two different strategies targeting our distributors and retailers. At the distributor level, we have continued to extend additional credit lines to a selected group to provide them with a safety net and encourage them to open more self-owned stores and we increased our sales rebates to all distributors. With over RMB930 million in cash as of December 31, 2013, we have a substantial capital base to support our loyal partners and provide them with the flexibility they need to adapt to a constantly changing market. On the retailer level, we continued to implement our shop rack subsidy initiative to retain our existing retailers as well as attract prospective retailers to join us. This is further supported by an extensive billboard advertisement campaign in 22 provinces, continuous training to the retailers and reduce recommended retail prices for 2013 collections to further improve price competitiveness of your products."
"In summary, we are confident that we have made the necessary changes to our business model to sustain momentum during these difficult times. We look forward to a market recovery and are well positioned to seize future market opportunities to drive growth over the long term."
Fourth Quarter 2013 Results
Revenue for the fourth quarter of 2013 was RMB486.9 million, representing a 8.6% decrease when compared with RMB532.5 million for the fourth quarter of 2012. The Company delivered approximately 1.84 million units to its distributors during the fourth quarter of 2013, compared with 1.82 million units during the fourth quarter of 2012. The total retail outlet count as of December 31, 2013 was 1,583. The table below sets forth the number of retail outlets by outlet type:
As of December As of December
31, 2012 31, 2013
Outlet Type:
Company-operated flagship stores 2 1
Distributor-operated stores 113 99
Distributor-operated flagship stores 5 4
Distributor-operated retail website - 1
Managed by authorized retailers 1,590 1,478
Total outlet count 1,710 1,583
===== =====
Gross profit decreased to RMB140.9 million in the fourth quarter of 2013 from RMB171.8 million in the fourth quarter of 2012. Gross margin was 28.9% in the fourth quarter of 2013 as compared with 32.3% in the fourth quarter of 2012. The decrease in gross margin was primarily due to the reduced prices the Company offered for its Fall/Winter 2013 Collection as well as the increased rebates offered to distributors and authorized retailers to further enhance their ability to compete in an increasingly challenging retail environment.
Interest and other income was RMB6.0 million in the fourth quarter of 2013 as compared to RMB4.0 million in the fourth quarter of 2012. The increase was mainly due to the higher interest income earned from higher time deposits placed with banks in the fourth quarter of 2013 as compared to the fourth quarter of 2012.
Selling and distribution expenses in the fourth quarter of 2013 decreased to RMB73.2 million from RMB91.6 million in the fourth quarter of 2012. The decrease was primarily due to a decrease in training expenses of RMB10.1 million and a decrease of RMB6.6 million in rack expenses for authorized retailers.
As part of its strategy to unify the image of its authorized retail outlets, the Company has been paying for shop rack, signage and various outlet-related accessories for authorized retail outlets opened or refurbished since July 2011. During the fourth quarter of 2013, the Company paid for shop rack, signage and various outlet-related accessories for 43 new retail outlets and refurbished 20 existing retail outlets, which includes expanding floor space for six existing retail outlets. This compared to 92 new retail outlets and refurbished seven existing retail outlets during the fourth quarter of 2012. The refurbishment of existing retail outlets is expected to upgrade our brand image, help attract new consumers and improve the presentation of our products, all in an effort to enhance retail outlet sales in the future. These expenses were approximately RMB11.5 million, or 2.4% of revenue, in the fourth quarter of 2013, compared with RMB18.1 million or 3.4% of revenue during the fourth quarter of 2012.
Administrative expenses decreased to RMB7.9 million in the fourth quarter of 2013 from RMB9.5 million in the fourth quarter of 2012, primarily due to a reduction of office expenses.
Profit before taxation was RMB65.9 million in the fourth quarter of 2013, compared with RMB74.8 million in the fourth quarter of 2012.
Income tax expense in the fourth quarter of 2013 was RMB16.9 million, compared with RMB19.1 million in the fourth quarter of 2012.
Profit after taxation for the fourth quarter of 2013 was RMB49.0 million, compared with RMB55.6 million in the fourth quarter of 2012.
Basic and diluted earnings per ADS were $0.14 in the fourth quarter of 2013, compared to $0.16 per ADS in the fourth quarter of 2012.
Financial Position
As of December 31, 2013, the Company had cash and cash equivalents of RMB806.5 million, and time deposits of RMB130.0 million held at banks with maturities of more than three months.
As of December 31, 2013, the Company had trade receivables of RMB431.1 million. The increase is primarily due to extending additional credit terms to distributors.
Prepayments to suppliers are prepayments paid to contract manufacturers for orders received from distributors and authorized retailers during the sales fair. The decrease in these prepayments to suppliers in 2013 is primarily due to the lower number of orders were placed with the contract manufacturers as a result of increased competition and softening sales.
Deposits received from distributors are primarily related to payments made by distributors for orders placed with the Company. The decrease in these deposits in 2013 is primarily due to lower orders from these distributors and hence lower deposits received from distributors.
Conference Call
Xiniya will host a conference call and live webcast at 8 a.m. Eastern Daylight Time (EDT) on April 17, 2014, (8 p.m. Beijing time on the same day).
The toll free dial-in details for the live conference call are as follows:
- USA: 1 800 8713110 or 1 888 7007397
- China: 800 803 6017
- Hong Kong: 800 96 8899
- International access: +886 2 21928018
Participant PIN Code: 742861#
A live webcast of the conference call will be available on: http://www.corpasia.net/cancast/us/index.php?id=usXNY_30&version=e
A telephone replay of the call will be available 2 hours after the end of the conference through May 16, 2014 at 8 a.m. EDT.
Conference Playback?
1. Dial the playback number?+886 2 33220777
2. Enter playback reference number?151008
3. Enter participant pin code?709934 #
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 = RMB6.0537 on December 31, 2013 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, 2013, 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 27 distributors. Its products are sold to consumers at over 1,500 authorized retail outlets owned and managed by third parties located in 22 provinces, four 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://www.xiniya.com.
For additional information, please contact:
China Xiniya Fashion Limited
Mr. Chee Jiong Ng
Chief Financial Officer
Telephone: +86 1365 5939 932
Email: ngcheejiong@xiniya.com
Christensen
Ms. Linda Bergkamp
Phone: +1-480-614-3004 in U.S.A.
Email: lbergkamp@ChristensenIR.com
Or
Mr. Christian Arnell
Telephone +86 10 5826 4939 in Beijing
Email: carnell@christensenir.com
CHINA XINIYA FASHION LIMITED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Expressed in thousands, except per share and per ADS amounts)
Three months ended December 31 Twelve months ended December 31
2012 2013 2013 2012 2013 2013
RMB RMB USD RMB RMB USD
Revenue 532,483 486,903 80,431 1,383,687 1,320,820 218,184
Cost of sales (360,658) (345,981) (57,152) (922,326) (932,639) (154,061)
-------- -------- ------- -------- -------- --------
Gross profit 171,825 140,922 23,279 461,361 388,181 64,123
Interest and other income 4,042 6,047 999 18,953 19,491 3,220
Selling and distribution expenses (91,620) (73,180) (12,088) (214,132) (238,855) (39,456)
Administrative expenses (9,476) (7,922) (1,309) (30,491) (32,620) (5,389)
------ ------ ------ ------- ------- ------
Profit before taxation 74,771 65,867 10,881 235,691 136,197 22,498
Income tax expense (19,142) (16,869) (2,787) (60,240) (39,030) (6,447)
------- ------- ------ ------- ------- ------
Profit for the period 55,629 48,998 8,094 175,451 97,167 16,051
Other comprehensive income for the period:
Exchange differences on translation of financial statements of entities outside the mainland of the People's Republic of China (1,028)
237 (322) (53) (586) (170)
Total comprehensive income for the period 55,866 48,676 8,041 174,865 96,139 15,881
====== ====== ===== ======= ====== ======
Earnings per share - basic and diluted (in RMB) 0.24 0.21 - 0.76 0.42 -
Earnings per ADS - basic and diluted (in USD) 0.16 - 0.14 0.49 - 0.28
Weighted average shares outstanding in the period ('000) 228,198 227,717 227,717 229,544 227,717 227,717
Weighted average ADS outstanding in the period ('000) 57,050 56,929 56,929 57,386 56,929 56,929
One ADS represents four ordinary shares.
CHINA XINIYA FASHION LIMITED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Expressed in thousands)
As of As of
December 31, December 31,
2012 2013 2013
RMB RMB USD
Assets
Non-current assets
Property,
plant and
equipment 15,512 9,303 1,537
Intangible
assets 12,695 8,566 1,415
Deposit
for land
use right 8,854 8,854 1,462
Total non-
current
assets 37,061 26,723 4,414
------ ------ -----
Current assets
Cash and
cash
equivalents 1,096,103 806,467 133,219
Time
deposits
held at
banks
with
maturity
over
three
months 50,000 130,000 21,474
Trade
receivables 351,989 580,337 95,865
Prepayments
to
suppliers 88,894 80,785 13,345
Inventories 10,157 32,042 5,293
Other
receivables
and
prepayments 14,141 17,093 2,823
------ ------ -----
Total
current
assets 1,611,284 1,646,724 272,019
--------- --------- -------
Total
assets 1,648,345 1,673,447 276,433
========= ========= =======
Equity and liabilities
Equity
Share
capital 77 77 13
Additional
paid-in
capital 519,077 519,077 85,745
Statutory
reserve 112,138 122,615 20,254
Currency
translation
reserve (19,122) (20,150) (3,329)
Retained
earnings 790,837 878,567 145,129
------- ------- -------
Total
equity 1,403,007 1,500,186 247,812
--------- --------- -------
Current liabilities
Trade
payables 90,563 25,594 4,228
Deposits
received
from
distributors 101,600 99,900 16,502
Other
payables
and
accruals 34,034 29,071 4,802
Current
income
tax
payable 19,141 18,696 3,089
------ ------ -----
Total
current
liabilities 245,338 173,261 28,621
------- ------- ------
Total
equity
and
liabilities 1,648,345 1,673,447 276,433
========= ========= =======
CHINA XINIYA FASHION LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in thousands)
Twelve months ended December 31
2012 2013 2013
RMB RMB USD
Cash flows from operating activities:
Profit before taxation 235,691 136,197 22,498
Adjustments for:
Depreciation of
property, plant and
equipment 4,643 4,939 816
Amortization of
intangible assets 215 2,253 372
Loss on disposal of
property, plant and
equipment 957 1,378 228
Interest income (17,458) (16,458) (2,719)
Foreign exchange gains (387) (1,044) (172)
Interest expense 263 - -
Share-based
compensation 1,888 1,040 172
Operating profit before
working capital
changes 225,812 128,305 21,195
Increase in trade
receivables (16,837) (228,348) (37,721)
(Increase)/decrease in
prepayments to
suppliers (9,549) 8,109 1,339
Increase in inventories (6,249) (21,885) (3,615)
Decrease in other
receivables and
prepayments 5,480 1,119 185
Increase/(decrease) in
trade payables 6,933 (64,969) (10,732)
Increase/(decrease) in
deposits received from
distributors 3,400 (1,700) (281)
Decrease in other
payables and accruals (3,965) (4,963) (820)
------ ------ ----
Cash generated by/
(used in) operating
activities 205,025 (184,332) (30,450)
Interest expense paid (263) - -
Income tax paid (78,607) (39,475) (6,520)
------- ------- ------
Net cash generated by/
(used in) operating
activities 126,155 (223,807) (36,970)
------- -------- -------
Cash flows from investing activities:
Increase in time
deposits held at banks
with maturity over
three months (50,000) (80,000) (13,215)
Proceeds from the
disposal of property,
plant and equipment 412 - -
Acquisition of
property, plant and
equipment (3,862) (108) (18)
Acquisition of
intangible assets (12,910) - -
Proceeds from VAT
refund related to
intangible assets - 1,876 310
Interest received 12,318 12,387 2,046
Net cash used in
investing activities (54,042) (65,845) (10,877)
------- ------- -------
Cash flows from financing activities:
Proceeds from short-
term bank loans 82,500 - -
Repayment of short-
term bank loans (82,500) - -
Purchase of treasury
shares (7,741) - -
Net cash used in
financing activities (7,741) - -
------ --- ---
Net increase/
(decrease) in cash and
cash equivalents 64,372 (289,652) (47,847)
Cash and cash
equivalents at
beginning of the
period 1,031,930 1,096,103 181,063
Exchange (losses)/gains
on cash and cash
equivalents (199) 16 3
---- --- ---
Cash and cash
equivalents at end of
the period 1,096,103 806,467 133,219
========= ======= =======
SOURCE China Xiniya Fashion Limited
