CHINA XINIYA FASHION LTD (ADR) XIAMEN, China, Dec. 29, 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 third quarter of 2014. The consolidated 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 consolidated financial statements in Renminbi ("RMB").
Third Quarter 2014 Highlights
-- Revenue during the third quarter of 2014 was RMB205.2 million, as
compared to RMB389.8 million in the third quarter of 2013.
-- Loss before taxation during the third quarter of 2014 was RMB206.1
million, as compared to profit before taxation of RMB8.7 million in the
third quarter of 2013.
-- Net loss in the third quarter of 2014 was RMB206.1 million as compared
to net profit of RMB6.0 million in the third quarter of 2013.
-- Loss per ADS were $0.59 in the third quarter of 2014 as compared to
earnings per ADS of $0.02 per ADS in the third quarter of 2013.
-- Xiniya's network of authorized retailers had a net reduction of 207
retail outlets in the third quarter of 2014, consisting of 49 new retail
outlets opened and 256 retail outlets closed. The total number of
authorized retail outlets was 1,214 as of September 30, 2014.
Chairman's statement
"We moved rapidly to execute our inventory buy back initiative during the third quarter as the ongoing downturn in China's menswear industry continued," commented Mr. Qiming Xu, Xiniya's Chairman and Chief Executive Officer. "We made substantial progress by buying back inventory during the quarter and have already made arrangements to sell them overseas so that the buy back will not affect the China market. In order to ensure that our retail network continues to attract customers and display new and innovative products, our buy back focused on removing the most outdated fashion products. According to our estimates, the inventory bought back during the quarter represents approximately one-third of the inventory currently in our sales channels. By working in close cooperation with our distributors and authorized retailers, we plan on selling another one-third through our retail network by offering discounts and promotions over the next year. While we believe that the remaining one-third is more than ample to maintain a healthy and flexible retail network, we may buy back more inventory as the situation evolves over the next years."
"Total value of purchase orders from our Spring/Summer Sales Fair in September 2014 declined in-line with our expectations as we work on two fronts to clear inventory channels. I am confident that the rapid execution of our inventory buy back during the quarter and the efficient deployment of our cash into specific areas of our business will allow Xiniya to develop in a more healthy, long-term manner. While the implementation of a new compressed business model will take time to bear fruit, I am pleased to see positive initial results as we work diligently towards generating increase value for our shareholders."
Third Quarter 2014 Results
Revenue for the third quarter of 2014 was RMB205.2 million, a decrease from RMB389.8 million during the third quarter of 2013. The decrease in revenue was mainly attributable to the reduction in orders by the Company's distributors due to a challenging retail environment and softening of the Chinese economy. The Company delivered approximately 0.9 million units to it's distributors during the third quarter of 2014, compared with 1.63 million units during the third quarter of 2013. As of September 30, 2014, the Company had a total of 1,214 retail outlets. The table below sets forth the number of retail outlets by outlet type:
As of December 31, 2013 As of September 30, 2014
Outlet Type:
Company-operated flagship stores 1 1
Distributor-operated stores 99 95
Distributor-operated flagship stores 4 3
Distributor-operated retail website 1 1
Managed by authorized retailers 1,478 1,114
Total outlet count 1,583 1,214
===== =====
Gross profit was negative RMB141.4 million in the third quarter of 2014 as compared with RMB115.9 million in the third quarter of 2013. The reduction was mainly due to the loss on inventory buy back from distributors.
Interest and other income was RMB5.9 million in the third quarter of 2014 as compared to RMB4.7 million in the third quarter of 2013. The increase was mainly due to higher time deposits of RMB600 million placed with banks in the third quarter of 2014 as compared to time deposits of RMB500 million placed with banks during the same period last year.
Selling and distribution expenses were RMB64.7 million in the third quarter of 2014, a decrease from RMB104.3 million during the third quarter of 2013. The decrease was primarily due to a reduction in advertising expenditure and a decrease in rack expenses for authorized retailers.
During the third quarter of 2014, the Company paid for shop rack, signage, and various outlet-related accessories for 49 new retail outlets and refurbished 67 existing retail outlets, which included expanding floor space for 12 existing retail outlets, as compared to 78 new retail outlets and 120 refurbished retail outlets during the third quarter of 2013. The refurbishment of existing retail outlets is expected to upgrade the older retail store image, help attract new consumers, and improve the presentation of Xiniya's products, all in an effort to enhance retail outlet sales in the future. These expenses were approximately RMB28.0 million, or 13.6% of revenue, in the third quarter of 2014, compared with RMB44.3 million, or 11.4% of revenue during the third quarter of 2013.
Administrative expenses were RMB5.9 million in the third quarter of 2014, a decrease from RMB7.5 million during the third quarter of 2013. The decrease was primarily due to reduction of headcount, office and other miscellaneous expenses during the third quarter of 2014.
Loss before taxation was RMB206.1 million in the third quarter of 2014, as compared with profit before taxation of RMB8.7 million during the third quarter of 2013.
Loss after taxation for the third quarter of 2014 was RMB206.1 million, as compared with profit of RMB6.0 million during the third quarter of 2013. Loss per ADS was ($0.59) in the third quarter of 2014, compared to earnings $0.02 per ADS in the third quarter of 2013.
Financial Position
As of September 30, 2014, the Company had cash and cash equivalents of RMB804.6 million, and time deposits of RMB350.0 million held at banks with maturities of more than three months.
As of September 30, 2014, the Company had trade receivables of RMB56.1 million. The decrease in trade receivables was primarily due to the inventory buy back from distributors which offset receivable from them.
Prepayments to suppliers are payments paid to contract manufacturers for orders received from distributors and authorized retailers during the sales fair. The decrease in these prepayments to suppliers from December 31, 2013 is primarily due to the reduction of the Company's 2015 Spring and Summer collection orders.
The increase in inventories was mainly due to the inventory buy back from distributors.
Deposits received from distributors are primarily related to payments made by distributors for orders placed with the Company. The decrease in these deposits from December 31, 2013 is primarily due to the reduction of the Company's 2015 Spring and Summer collection orders.
Conference Call
Xiniya will host a conference call and live webcast on Monday, December 29, 2014 at 8 a.m. Eastern Standard Time (9 p.m. Beijing time on the same day).
Dial-in details for the earnings conference call are as follows:
- USA: 1877-679-2987
- China: 800-803-6152
- Hong Kong: 800-908-575
- International access: +852 3056 2688
Participant PIN Code: 511569#
A live webcast of the conference call will be available on: http://www.corpasia.net/cancast/us/index.php?id=usXNY_33&version=e
A telephone replay of the call will be available 2 hours after the end of the conference through January 28, 2015 at 8 a.m. EST.
Conference Playback?
Hong Kong 3060-0238
China 1080-0265-2561 Southern
China -CT
1080-0650-0588 Northern
China -CNC
USA 1866-345-5132
Conference Reference: 214311#
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 = RMB6.138 on September 30, 2014 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 September 30, 2014, 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 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 26 distributors. Its products are sold to consumers at over 1,200 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 5900-1548 in Beijing
Email: carnell@christensenir.com
CHINA XINIYA FASHION LIMITED
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Expressed in thousands, except per share and per ADS amounts)
Three months ended September 30 Nine months ended September 30
2013 2014 2014 2013 2014 2014
RMB RMB USD RMB RMB USD
Revenue 389,826 205,214 33,433 833,917 611,520 99,628
Cost of sales (273,960) (149,999) (24,438) (586,658) (441,434) (71,918)
Loss on inventory buy back - (196,583) (32,027) - (196,583) (32,027)
--- -------- ------- --- -------- -------
Gross profit/(loss) 115,866 (141,368) (23,032) 247,259 (26,497) (4,317)
Interest and other income 4,729 5,859 955 13,444 16,638 2,711
Selling and distribution expenses (104,346) (64,709) (10,542) (165,675) (119,481) (19,466)
Administrative expenses (7,507) (5,866) (956) (24,698) (22,208) (3,618)
------ ------ ---- ------- ------- ------
Profit/(loss) before taxation 8,742 (206,084) (33,575) 70,330 (151,548) (24,690)
Income tax expense (2,775) - - (22,161) (14,600) (2,379)
------ --- --- ------- ------- ------
Profit/(loss) for the period 5,967 (206,084) (33,575) 48,169 (166,148) (27,069)
Other comprehensive income/(loss) for the period:
Exchange differences on translation of financial
statements of entities outside the mainland
of the People's Republic of China
(706)
(65) (276) (45) 419 68
Total comprehensive income/(loss) for the period
5,902 (206,360) (33,620) 47,463 (165,729) (27,001)
===== ======== ======= ====== ======== =======
Earnings/(loss) per share - basic and diluted (in RMB)
0.03 (0.91) 0.21 0.73
Earnings/(loss) per ADS - basic and diluted (in USD)
0.02 (0.59) 0.14 0.48
Weighted average shares outstanding in the period ('000)
227,717 227,717 227,717 227,717
Weighted average ADS outstanding in the period ('000)
56,929 56,929 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, September 30,
2013 2014 2014
RMB RMB USD
Unaudited Unaudited
Assets
Non-current assets
Property, plant
and equipment 9,303 6,463 1,053
Intangible assets 8,566 6,926 1,128
Deposit for land
use right 8,854 8,854 1,443
Total non-
current assets 26,723 22,243 3,624
------ ------ -----
Current assets
Cash and cash
equivalents 806,467 804,622 131,088
Time deposits held at banks with maturity
over three months
130,000 350,000 57,022
Trade receivables 580,337 56,069 9,135
Prepayments to
suppliers 80,785 31,341 5,106
Inventories 32,042 197,999 32,258
Other receivables
and prepayments 17,093 92,351 15,046
------ ------ ------
Total current
assets 1,646,724 1,532,382 249,655
--------- --------- -------
Total assets 1,673,447 1,554,625 253,279
========= ========= =======
Equity and liabilities
Equity
Share capital 77 77 13
Additional paid-
in capital 519,077 519,077 84,568
Statutory reserve 122,615 122,615 19,976
Currency
translation
reserve (20,150) (19,731) (3,215)
Retained earnings 878,567 713,105 116,179
------- ------- -------
Total equity 1,500,186 1,335,143 217,521
--------- --------- -------
Current liabilities
Trade payables 25,594 115,205 18,769
Deposits received
from
distributors 99,900 55,800 9,091
Other payables
and accruals 29,071 46,064 7,505
Current income
tax payable 18,696 2,413 393
------ ----- ---
Total current
liabilities 173,261 219,482 35,758
------- ------- ------
Total equity and
liabilities 1,673,447 1,554,625 253,279
========= ========= =======
CHINA XINIYA FASHION LIMITED
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in thousands)
Nine months ended September 30
2013 2014 2014
RMB RMB USD
Cash flows from operating activities:
Profit/(loss) before taxation 70,330 (151,548) (24,690)
Adjustments for:
Depreciation of property, plant
and equipment 3,777 2,930 477
Amortization of intangible
assets 1,707 1,640 267
Loss on disposal of property,
plant and equipment 971 - -
Interest income (11,913) (15,243) (2,483)
Foreign exchange (gains)/losses (717) 473 77
Provision for sales return - 32,300 5,262
Share-based compensation 782 686 112
Operating profit/(loss) before
working capital changes 64,937 (128,762) (20,978)
(Increase)/decrease in trade
receivables (79,141) 524,268 85,414
Decrease in prepayments to
suppliers 29,786 49,444 8,056
Increase in inventories (190,334) (165,957) (27,038)
Increase in other receivables
and prepayments (39,359) (65,005) (10,591)
Increase in trade payables 111,786 89,611 14,599
Decrease in deposits received
from distributors (32,100) (44,100) (7,185)
Decrease in other payables and
accruals (21,403) (15,307) (2,494)
------- ------- ------
Cash (used in)/generated by
operating activities (155,828) 244,192 39,783
Income tax paid (37,065) (30,883) (5,031)
------- ------- ------
Net cash (used in)/generated by
operating activities (192,893) 213,309 34,752
-------- ------- ------
Cash flows from investing activities:
Increase in time deposits held at banks with maturity over
three months
(300,000) (220,000) (35,842)
Acquisition of property, plant
and equipment (108) (90) (15)
Proceeds from VAT refund
related to intangible assets 1,876 - -
Interest received 5,135 4,990 813
Net cash used in investing
activities (293,097) (215,100) (35,044)
-------- -------- -------
Net decrease in cash and cash
equivalents (485,990) (1,791) (292)
Cash and cash equivalents at
beginning of the period 1,096,103 806,467 131,389
Exchange gain/(loss) on cash
and cash equivalents 11 (54) (9)
--- --- ---
Cash and cash equivalents at
end of the period 610,124 804,622 131,088
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SOURCE China Xiniya Fashion Limited
