Li Ning to set forth go forward plan to improve business

August 23, 2012 - Hong Kong

Li Ning Company Limited announces its results for the six months ended 30 June 2012. Revenue was RMB3,880.1 million, representing year-on-year decline of 9.5%. Profit attributable to equity holders and earnings per share both went down by 84.9% to RMB44.3 million and RMB4.21 cents respectively. The results were broadly in line with the Group's performance guidance throughout the period. Moving forward, the Group will endeavour to enhance overall management strength and operational capabilities, set forth the go forward plan and short-term initiatives.

Under the current operating conditions, the Board of Directors resolved not to declare interim dividend for the six months ended 30 June 2012 (30 June 2011: RMB11.13 cents per ordinary share). The Board believes that the Group should retain cash for its future development.

Mr. Li Ning, Chairman of the Group commented, "During the first half of 2012, in the face of the industry slowdown and intensifying competition, the Group's business performance showed a relatively large degree of decline. To effectively respond to the industry environment, and to propel the Group's long-term, sustainable development, the Group decided to focus its resources on the core LI-NING brand and the Chinese market, centre on the essence of sports, to give full play to the brand value. Despite the pressures, the Group continued to press ahead with its reforms during the first half."
Adhering to the strategy of focusing on its core business, during the first half of 2012, the Group formulated and executed its Olympics integrated marketing plan and sustained its consistent communication with consumers on the brand positioning via marketing platforms founded on core sports competitions, combined with new product functionality and unique brand personality to strengthen brand equity. In particular, the Group further invested into its basketball category in June, when it signed a memorandum of cooperation regarding the Group's role as an equipment sponsor for the CBA for five seasons from 2012/2013 through 2016/2017.
2012 marks the year of the Games of the 30th Olympiad, and to capture the opportunities of the London 2012 Olympic Games, the Group conducted and participated in a series of activities including the "Olympic Flame Witnesses Change", wherein Mr. Li concluded the torch relay across Greece with the last flame handover; "Witness the Change, the Dragon Dazzles London" press conference for sponsorship of five national gold medal teams' Olympic sports gear; an exhibition tour to showcase LI-NING brand's professional Olympic gear for the five national gold medal teams; and "The Chinese will Make the Change" themed Olympics marketing and promotions which integrates a variety of resources including TV commercial, outdoor advertisement, brand public relations, POP key vision, in-store displays, field events, themed sales as well as digital sales and marketing.

For the Olympics, the LI-NING brand maintained a close partnership with the five Chinese national gold-medal teams in badminton, gymnastics, diving, table tennis and shooting, for which it has been a long-term sponsor. The Group endorsed other world-class sports sponsorship resources involved in the London 2012 Olympic Games, such as Christian Taylor, the young, up-and-coming American triple jump star who won gold; the Spanish National Basketball Team, which won silver, and superstar pole vault athlete, Yelena Isinbaeva, who won bronze. All these teams and athletes were equipped with LI-NING gear throughout the London Olympics inside and outside of the stadium, giving the LI-NING brand and products maximum exposure.

During the first half of 2012, the Group's continued to steadily progress with distribution channel reforms, by making structural adjustments to its stores according to the evaluation results based on a principle of profitability and cost-savings, and closing 1,200 inefficient stores. As at 30 June 2012, the total number of LI-NING brand conventional stores, flagship stores, factory outlets and discount stores amounted to 7,303, representing a net decrease of 952 stores as compared to 31 December 2011. In particular, there were 271 LI-NING brand factory outlets and 394 LI-NING brand discount stores (31 December 2011: 269 factory outlets, 358 discount stores) and the proportion of retail revenue accounted by clearance channels increased.

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