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Li Ning's strategy for the long term remains intact
Jan '11
Li Ning Company Limited will be holding discussions with analysts and investors on the estimated results of the Group for the year 2010 as well as future prospects and strategies ahead of publication of its announcement of the annual results for the year ended 31 December 2010.

Retail sales for the fourth quarter of 2010
Due to the ongoing distribution channel reform the Group has been conducting and the late arrival of winter, the same-store sales growth of LI-NING brand products for the fourth quarter of 2010 increased by approximately 3.6% as compared with the corresponding period of 2009, and approximately 3.9% for the full-year of 2010.

As at the end of 2010, the total number of LI-NING brand stores had exceeded the 7,900 target. The retail discount rate offered for the fourth quarter of 2010 was approximately 22%.

Estimated result for year 2010

The estimated key financial results of the Group for the year ended 31 December 2010 are as follows:
• The revenue growth rate of LI-NING brand products for 2010 is expected to be broadly in line with that of the China sporting goods industry.
• Due to changes in the market environment, the aggregate revenue of the Group's other brands, including Double Happiness, Lotto, Z-DO, AIGLE and Kason recorded relatively slow growth, bringing down the Group's total revenue growth for 2010. It is estimated that contribution from other brands to the Group's total revenue in 2010 would maintain at about the same level as in 2009.
• Due to characteristics of the table tennis equipment business, Double Happiness, being the largest business among the Group's other brands, saw a mid to high single digit growth in its revenue for 2010. Its contribution to the Group's total revenue was at about the same level as in 2009.
• The Group's gross profit margin and net profit margin for 2010 were broadly in line with levels achieved in 2009.
• New store openings fell short of the target set at the beginning of 2010. Meanwhile, the Group was still conducting tests and fine-tuning the new image portrayed in the sixth-generation stores. The number of stores under renovation was fewer than that in the previous years. As a result, the Group spent less than what was originally budgeted on provision of support to stores. Advertising and promotion (A&P) expenses as a percentage of revenue for 2010 was close to 15%.
• In light of the retail environment in 2010, the Group intensified its support to distributors, resulting in an increase in account receivable days. Nonetheless, our bad debts were still maintained at low levels. As the Group continued to strengthen its supply chain management, the inventory turnover days in 2010 exhibited an ongoing improvement. The cash conversion cycle, while longer than that of 2009, was still shorter than that of 2008.

The above estimated results of the Group for the year ended 31 December 2010 are based on management's preliminary assessments of the Group's unaudited consolidated management accounts for the period. Such financial information is yet to be reviewed and confirmed by the auditors and the audit committee of the Company.

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