Annual ResultsAnnouncement

18 March 2014

2013

Disclaimer

2

Cautionary note regarding forward-looking statements

This presentation material contains certain forward-looking statements with respect to the financial

condition, results of operations and business of the Company. These forward-looking statements represent

the Company’s expectations or beliefs concerning future events and involve known and unknown risks and

uncertainty that could cause actual results, performance or events to differ materially from those

expressed or implied in such statements. Certain statements, such as those that include the words

“potential”, “estimated”, “expect”, “anticipates”, “objective”, “intends”, “plans”, “believes”, “estimates”, and

similar expressions or variations on such expressions may be considered “forward-looking statements”.

Forward-looking statements involve inherent risks and uncertainties. Readers should be cautioned that a

number of factors could cause actual results to differ in some instances materially, from those anticipated

or implied in any forward-looking statement. Forward-looking statements speak only as of the date they

are made, and it should not be assumed that they have been reviewed or updated in the light of new

information or future events. Trends and factors that are expected to affect the Company’s results of

operations are described in the “Financial Review”, “Macro and Industry Review”, “Business Review” and

“Outlook”.

Agenda

3

Financial Review

Macro and Industry Review

Business Review

Outlook

Open Forum

Financial Review

4

5

Financial Highlights

For the year ended 31 December

2013 2012 Change

(RMB mn) (RMB mn) (%)

Revenue 1,414 1,772 -20.2%

Gross profit * 681 842 -19.1%

Operating profit 84 89 -5.6%

Profit attributable to equity holders 210 177 18.6%

Gross profit margin * 48.2% 47.5% 0.7p.p.

Operating profit margin 5.9% 5.0% 0.9p.p.

Net profit margin 14.9% 10.0% 4.9p.p.

Basic earnings per share（RMB cents） 3.82 3.19 19.7%

* Excluding provisions for impairment of inventories

6

Sales by Market, Channel and Product

1,165904

607

510

0

500

1,000

1,500

2,000

2012 2013

RMB mn

1,414

1,772

China

34.3%

65.7%63.9%

36.1%

Accessories

3.3%(3.5%)

Apparel

73.6%

(69.9%)

Footwear

23.1%(26.6%)

2013

Japan

RMB mn

6.3%

93.7%81.3%

18.7%

861

1,129

Sales by channel

– Kappa ChinaSales by market and brand

Sales by product

– Kappa China

Wholesale

Business

Retail

Business Remark: Comparable figures for 2012 are shown in brackets

Revenue from the China segment decreased by 22.4% as compared to 2012, mainly due to: 1) In order to alleviate inventory pressure at the retail end, the

company has further adopted the “pre-order+ prop-order” sales method, through which certain amount of goods ordered by our distributors was proactively

reduced. Meanwhile, closer communication with our distributors regarding their demands and replenishing merchandise via prop-order method had allowed

Kappa products at the retail end to better meet consumers‟ needs；2) net closure of 826 stores in Kappa China segment in 2013;

Revenue from the Japan segment decreased by 16% mainly due to the effect of Japanese Yen depreciation;

Retail business of Kappa China segment fared well in 2013. As at 2013, the Group owned 272 self-operated outlets. Proportion of revenue from self-operated

retail stores increased from 6.3% in 2012 to 18.7% in 2013;

Sales from Kappa‟s footwear in the China segment decreased by 3.5% as compared to 2012, representing 23.1% of the overall revenue.

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Gross Profit Margin by Market and Product

Gross profit margin by market *Gross profit margin by product

– Kappa China *

* Excluding provision for impairment of inventories

Gross profit margin in the China segment in 2013 increased by 4.1 percentage points to 55.2% as compared to the

same period of last year, mainly due to decreased discount of off-season products in 2013 compared to the same

period of last year, and increase in sales of new products that are of higher gross profit margin.

Gross profit margin in the Japan segment in 2013 decreased by 5.0 percentage points as compared to the same

period of last year, mainly due to increase in production cost and increased discounts to clear inventory of off-season

products.

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Expense Analysis

For the year ended 31 December

2013 2012 Change

(RMB mn) (RMB mn) (%)

– Sales expense* 112 143 -21.7%

As a % of sales 7.9% 8.1% -0.2p.p.

– Advertising and marketing expense** 44 107 -58.9%

As a % of sales 3.1% 6.0% -2.9p.p.

– Staff cost 153 188 -18.6%

As a % of sales 10.8% 10.6% 0.2p.p.

– Product R&D cost 48 89 -46.1%

As a % of sales 3.4% 5.0% -1.6p.p.

* Sales expense mainly includes rentals for the Group’s self-operated retail outlets, management expenses, trustee expenses, and expenses

directly related to retail sales, including trade fair expenses, store POP design and production expenses, as well as expenses for store

promotions;

** Advertising and marketing expense refers to expenses directly related to brand promotion expenses, including all kinds of advertisement

design, production and placement expenses, sponsorship and brand promotion activities.

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Inventory, Trade Receivables and Trade Payables –

China Segment

Trade Receivables**Inventory* Trade Payables

daysRMB mn RMB mn RMB mndays days

For the year ending 31 December For the year ending 31 December For the year ending 31 December

* Excluding provision for impairment of inventories

** Excluding provision for bad debts

As of 2013, the Group has proactively digested off-season inventories via various channels, resulting in a significant

decrease in both inventory turnover-days and inventory amount of the China segment.

As of 2013, the balance of trade receivables of the China segment was relatively stable. However, there are some

increase in related trade receivables due to the increase of self-operated retails outlets.

60

55

7252

0

50

100

0

50

100

2012 2013

354

224277

260

0

100

200

300

400

0

100

200

300

400

500

2012 2013

341404

121151

0

100

200

0

100

200

300

400

500

2012 2013

10

Maintain Solid Net Cash Position

For the year ended 31 December

2013 2012

(RMB mn) (RMB mn)

Operational net cash flow(1) 271 273

As at 31 December 2013 As at 31 December 2012

(RMB mn) (RMB mn)

Cash & bank deposits(2) 1,097 2,713

Other financial assets(3) 3,551 2,261

Less：bank loans - -

Net bank balance and other financial

assets4,648 4,974

(1) Included decrease in restricted bank deposit of approximately RMB85 million

(2) Included restricted bank deposit of RMB52 million (31/12/2012: RMB137million)

(3) Included principal-guaranteed treasury products issued by major commercial banks in the PRC

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Dividends for 2013

RMB centsFor the year ended 31 December

2013 2012

Basic earnings per share 3.82 3.19

Interim dividend and

special dividend1.17 1.23

Final dividend and special

dividend1.49 1.00

Annual payout ratio 70% 70%

Macroeconomic and

Industry Review

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Macroeconomic and Industry Review in 2013

Complex and Volatile Macro EconomyA Year Full of Challenges and

Opportunities in the Industry

1. The global economy witnessed an imbalanced and

moderate recovery and yet the real GDP growth was

below the average 4% level during the past decade prior

to the financial crisis. China's economic growth

maintained at a moderate pace, whereas the Bank of

Japan embarked on QE at the beginning of the year

leading to a decline in real income and a weak yen.

2. In 2013, China's economy sustained a steady growth on

the whole. With the relevant government conferences

held in the second half of the year, the policy has shifted

its tone towards keeping a stable growth.

However, China is still at a critical stage of development

transition. The deep-rooted conflicts accumulated over a

long period of time are yet to be alleviated and the

foundation of economic stabilization strengthened.

3. In 2013, China continued to see a sluggish domestic

consumption with an annual growth rate at 1.1

percentage points lower than that in 2012.

1. Under the influence of urbanization and industrial upgrade, the

household consumption is gradually upgrading with diversified

demands. Under the double impact of lacklustre sentiments in

the retail market and the booming growth of e-

commerce, traditional branded enterprises were facing cutbacks

to various extents in terms of sales, profit and size of their retail

networks, while the physical sales channels continued to dwindle.

2. Brand operators have begun to turn to e-commerce to provide

consumers by gradually integrating online and offline resources

on the back of their strengths in supply chain and operations.

3. The sportswear industry will focus more on the essence of

business where consumer needs becomes the center of attention

and consumer experience will be further enhanced.

4. It is expected that the domestic sportswear industry is still in a

crucial period of transition and reform. With both challenges and

opportunities abound, traditional brand operators have no choice

but persist in developing both online and offline businesses in a

synergised manner to optimize distribution of sales

channels, build brands, design new products, enhance control

and management as well as operating capability effectively, in

order to remain sustainable and competitive in the market.

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Business Review

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Brand+Retail - Channel A

Distributors

Franchised

Stores

Self-operated

Stores

1

2

*Comparable figures for 2012 are shown in brackets. ** Including company subsidiaries directly-owned stores

In order to quickly respond to the market

needs, and to better satisfy and benefit

consumers, the Group has started to increase

control on the retail end and strengthen our

retail management capabilities since 2012.

In 2013, the Group has changed its business

model from the initial distributor-only model

to a new business model which comprises of

distributors, franchised stores and self-

operated stores. These three formats were

effectively combined according to the

characteristics and needs of different regions

for maximum market development.

23%

1%

56% 54%

21%

45%

2013 2012

Store Proportion

Other

Distributors

Subsidiaries Max Sports

75%

65%

25% 35%

2013 2012

Store Type

Store-in-store Standalone

34%(29%)

26%(26%)

29%(31%)

11%(14%)

Stores by Tier Cities*

1 2 3 4

55%(50%)

45%(50%)

Proportion of Distributors’ and Sub-distributors’ stores*

Distributors** Sub-distributors’

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Brand+Retail - Inventory B

1

2

3

2011 2012 2013

Inventory Amount (In Terms of Tag Price)

公司

零售终端

CompanyRetail End

In 2013, the Group digested over RMB 1 bn (in

terms of tag price) of out-of-season products

through various channels, resulting in an overall

improvement in inventory structure.

The Group‟s China inventory level has reduced

significantly after two years of inventory

clearance, thus lightening the burden of the

Group and establishing a solid foundation for the

Group‟s future recovery and realignment.

Together with the implementation of the new

business model, the Group will continue to

develop and refine an effective and long-term

inventory clearing mechanism so as to ensure

that the Group‟s inventory stays at a healthy

level.

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Brand+Retail - Supply Chain C

7%~8%

10%

30%

0%

5%

10%

15%

20%

25%

30%

35%

2012 2013 长期目标

Percentage of Fast Replenishment toTotal China Sales

Long-term Goal

1

3

2

Jiangsu Taicang Technical Center

In 2013, the prop-order volume of the Kappa brand

amounted to over 400,000 pieces in China, and the

percentage of prop-order amount to total new product

sales is 10%.

The Group‟s logistics department implemented an online

B2C distribution method which provided a stable and

effective logistics support for rapid adjustment of stock

allocation.

The integration of production technologies between

China and Japan will continue to deepen, whilst giving

full play to their respective advantages in order to

contribute to the Group‘s product development and

production cost control.

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Brand+ Product - MarketingA

1

2

3

On 20 December 2013, a „LOVE・KOMBAT‟product

launch presentation was held, as the Kappa China

team drew on the strengths of their best designers

to unveil new items in the „KOMBAT‟ series as the

star products for the 2014SS season. Famous Hong

Kong singer and actor Daniel Chan, and the well-

known Chinese actress Wang Likun were invited to

give a lively showcase of the flair and dynamism of

the KOMBAT series, . ensuring a vivid, visual

experience of the brand new Kappa products for all

attending guests.

Kappa‟s promotion strategy in China continues to

focus on investing in popular platforms including

Sina Weibo and “Mahua Funage”play, stepping up

product publicity, increasing brand exposure, as

well as keeping the brand fresh.

In the 2H13, Kappa participated as a sponsor for the

“2013 Music Radio for Schooling – Charitable

Schooling Assistance Campaign” jointly organized

by China National Radio and Childrens Foundation

o f C h i n a , a i m i n g a t encouraging people to

participate in providing charity donations and

encouragement to children in impoverished rural

areas in West China.

Top left: The Kappa Kombat series was presented; Right: Hong Kongsinger and actor Daniel Chan, and China’s well-known actress WangLikun at the product launch; Bottom left: Product introduction by one ofKappa’s designers.

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Brand+ Product - Kappa KOMBATB

1 The Kappa KOMBAT series, including KOMBAT

hoodie, KOMBAT pants and KOMBAT jumpsuits are

not only sporty but stylish. The Kappa designers

have preserved the basic sports elements of the

brand whilst incorporating more fashion elements into

the collection by integrating professional designs into

everyday wear, utilizing 3D cutting to enhance body

fit, as well as ensuring high quality and comfortable

materials.

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E-commerce

1

2

In 2013, approximately 1.3 million pieces of old inventories

was digested through online channels, generating a sales

volume that accounts for about 15% of total revenue in

China.

Since the Group‟s inventory level in terms of amount and

structure has achieved a reasonable level, e-commerce has

gradually fulfilled its tactical role in clearing out-of-season

products. From the 2H13, new collections and online

exclusive products were launched in the Group‟s sel f -

operated and wholesale e-commerce channels.

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RDK

2

1

Strengthening promotional activities at retail outlets brought the

brand closer to consumers, especially through interactive

activities in shopping malls during certain festivals to increase

brand awareness and product acceptance.

RDK continued to position itself at the middle to high-end market.

Targeting at the fashion conscious consumers, RDK enhanced

its interaction with them via internet and mobile platforms, such

as Sina Weibo and WeChat, and popular shopping websites

such as Tmall, Shangpin and etc. to disseminate related product

concept, activities and information in a timely manner.

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Left: Beijing Oriental Plaza RDK store and store opening promotions, Right: RDK online promotion activities

Japan Business – Phenix

I n the 2H13 , Phenix focused on

expanding outdoor promotions with the

aim of increasing brand awareness.

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Phenix is proud to continue to be the

main sponsor for both Norwegian

Olympic and Paralympic Committee and

Norway Ski Federation Alpine Ski Team

for 2014 Sochi Olympic and Paralympic

Games. Norway has placed Second on

the Sochi gold medal ladder with 11

Gold, 5 Silver and 10 Bronze medals.

2

1

Japan Business – Kappa

Mitsuo Ogasawara, popular Japanese soccer player

Kappa Japan continued supplying team uniforms to JEF United Ichihara

Chiba Soccer Club and Consadole Sapporo Soccer Club. Moreover, Mori

Katsuyuki, a famous motorcyclist in Japan, was invited to be its Brand

Ambassador, and Mitsuo Ogasawara, a popular Japanese soccer

player, to endorse its soccer footwear line. Kappa Golf Japan also

sponsored Shinho Oyama, a well-known golfer, who won the final game of

2013 Women‟s Golf and the LPGA Tour Championship RiCO Cup.

Leveraging on the celebrity influence, Kappa further enhanced its brand

awareness in Japan.

Left: Shinho Oyama, well-known Japanese golf player; Right: Mori Katsuyuki, famous motorcycle player in Japan

23

Kappa Kids – Children's Clothing (I)

1

2

Kappa, joining hands with PacLantic, entered into the children‟s

wear market since 2H12, and created Kappa Kids brand with

the brand concept of fashion, happiness, and confidence. As an

important part of the Group's multi-brand strategy, the

development of the Kappa Kids brand is a breakthrough worth

anticipating by the market.

Kappa Kids is positioned as a high-end fashion children‟s wear.

Its products inherit the Kappa grown-up lines‟ distinctive

characteristics - bright colours, fashionable and dynamic design

as well as high-quality materials.

Kappa Kids – Children's Çlothing (II)

With the expansion of Kappa KOMBAT series, Kappa

Kids have also simultaneously launched a series of

KOMBAT hoodie and KOMBAT pants specifically for

children and the series was subsequently launched in

all of the Kappa Kids outlets, leading the trend in

children's sportswear.

Kappa Kids – Children's Clothing (III)At the end of 2013, Kappa Kids has a total of 118 stores. In 2014, the store

number is expected to continue to grow.

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Outlook

27

28

The Group’s Main Business Strategy for 2014 (I)

New Business

Model

Recovery of

Channels

• In 2014, the Group will further implement, reform, expand and improve the new

business model that incorporates self-owned retail stores+dealership+franchise chain.

• The core objectives of the new business model is to accelerate product turnover at the

retail end and further strengthen the Group‟s control over product and operation.

• The Group will remain focus in activating remaining inventories at the retail end and

increase the efficiency of inventory flow throughout the entire business chain through

the establishment of an effective clearance mechanism.

• Under the new business model, the distribution response time will be shortened and the

merchandise allocation will be more systematic and accurate.

• Over a year of test piloting and verification, self-operated retail subsidiaries have

proven to be a significant part of the Group‟s overall business. The subsidiaries are able

to contribute sales and generate a remarkable sales premium to the Group whilst

ensuring profit making.

• In 2014, the Group will further expand the scale and raise the profitability of the

subsidiaries. It is estimated that their sales revenue will account for 30% of the Group‟s

total sales.

• The Group will activate a channel recovering program in 2014, laying a foundation for

the full recovery of the Group in the near future.

Proportion of

self-operated

stores

expected to

increase

29

The Group’s Main Business Strategy for 2014 (II)

Transformation

of E-commerce

Business

Revitalization

of Brand Image

• Due to the adjustment of market strategy in 2013, the overall brand and marketing

investment was streamlined and the brand image of Kappa was slightly affected. In

order to align with the full business recovery strategy, the Group will adequately

increase the brand‟s marketing investment to recalibrate the brand image of Kappa in

2014.

• The Group will keep utilizing its competitive edges in sports and recreational marketing

as a primary approach in reshaping the brand. In addition, new digital media will be

employed more frequently to attract the younger generation.

• E-commerce channel has served as the main means to clear old inventories in the

past two years and had made a significant contribution in inventory clearance. Since

the amount and structure of the Group‟s inventory has reached a reasonable level, E-

commerce has fulfilled its tactical role in clearing out-of-season products and will be

repositioned accordingly.

• In 2014, E-commerce business will not only complement Kappa‟s distribution channel

to cater for the new shopping habits of the youngsters but will also serve as a new

medium for the brand‟s image makeover by increasing the percentage of new and

online exclusive products being offered online and consistently enhancing the

interactive function between the consumers and the e-commerce platform.

Open Forum

30

31

IR Department Contact Details

E-mail IR@dxsport.com.cn

Tel. +86(10) 6783 6585

Fax. +86(10) 6785 6606

Website http://www.dxsport.com

Address Building 21, No. 2 Jingyuanbei Street, Beijing Economic

and Technology Development Zone, Beijing, China