Li Ning Sees 25.4% Revenue Growth in 2009

Li Ning Group Limited reported revenue grew by 25.4% to RMB8,386.9 million ($1.22 billion). Profit attributable to equity holders rose by 31.0% to RMB944.5 million ($138.3 million), or RMB90.75 cents a share.

“2009 was an extremely challenging year with economies around the
world swept by the global financial crisis. China was also impacted by
this crisis in 2009, especially in the first half of the year. In
addition, the post-Beijing Olympics effect impacted the pace of growth
of the sporting goods industry during the year,” said Li Ning,
Chairman of the Group. “Against the backdrop of a challenging operating
environment, the Group, under the excellent leadership of the management
and relentless efforts of our staff, reinforced its financial strength
and boosted its competitiveness in key areas including its brands,
products and new sports category, thus achieving solid business and
financial growth.”

As the Group’s core brand, LI-NING brand sales accounted for
91.7% of the total revenue, grew by 21.1% to RMB7,693,263,000 ($1.1 billion) . Sales of
LI-NING brand footwear products, apparel products and accessories grew
by 19.1%, 22.3% and 27.4% respectively.

The Group continued to develop its multi-brand strategy during
the year. Revenue from Double Happiness and Lotto brands amounted to
RMB427,088,000 and RMB76,155,000, accounting for 5.1% and 0.9% of the
Group’s total. Total revenue generated by AIGLE, Z-DO and Kason brands
aggregated RMB190,404,000 ($27.9 million), representing for a relatively small
proportion of the Group’s total revenue.

Brand-building is the focus of the Group’s business and reflects
the Group’s core competencies. To date, the Group’s arsenal of
best-in-class sports sponsorship resources include China’s 5 National
gold medal-winning teams in Table Tennis, Diving, Gymnastics, Shooting
and Badminton, the Argentina National Basketball Team, the Spanish
National Basketball Team and 18 Provincial Track and Field Teams in
China, Russian pole vault athlete Elena Isinbayeva, tennis player Yan
Zi, Peng Shuai, Sun Shengnan, Ivan Ljubicic and Yang Tsung-hua, NBA
players Shaquille ONeal, Baron Davis, Jose Calderon and Hasheem
Thabeet. Their spectacular performance in various sports tournaments
helped raise the professional image and profile of the LI-NING brand.

In 2009, the Group drove forward its brand differentiation
strategy and made successful inroads into the badminton category.
Playing in full LI-NING brand gear, the Chinese National Badminton Team
defended their championship title at the 2009 LI-NING Sudirman Cup. In
addition, during the year, the Group carried out a series of integrated
marketing activities including the sponsorship of “BWF Super Series –
2009 LI-NING China Masters” and “Badminton World Federation Super Series
– LI-NING China Open 2009”, which immensely enhanced consumers
impression of LI-NING brand’s badminton products and the association of
the LI-NING brand with badminton. Meanwhile, leveraging on the immense
popularity of badminton, the Group rolled out LI-NING brand badminton
gear in Hong Kong and cities in Southeast Asia such as Singapore.

The Group continuously expanded its sales channel coverage,
especially in second- and third-tier cities that have the strongest
growth potential. Meanwhile, the Group has also enhanced the management
of retail store operations in metropolitan and first-tier cities through
establishing uniform retail operation standards. As at 31 December
2009, the Group had 8,156 retail outlets in China (7,249 of which were
Li-NING brand stores), representing a net addition of 1,239 stores as
compared to last year. With respect to the LI-NING brand, the Group had
approximately 128 distributors operating a total of 6,854 franchised
retail stores nationwide as well as a total of 395 directly-managed
retail stores in Beijing, Shanghai and 15 other provinces in China.

The Group continued its tremendous efforts in the area of product
design, research and development. In October 2009, three LI-NING brand
products, namely basketball shoes Dragon scale and G-SHARK,
and football shoes TAICHI, won the “iF Design Award China 2009”.
In December, G-SHARK also won the “China Red Star Design Award
2009”. the Group’s “X-claw” and “Fossile” were also
among the winners. These awards are strong testimony to the Group’s
strengths in product innovation.

Going forward, structural changes of China’s economy,
urbanization and domestic consumption will become the focus of
attention. Changes in lifestyle and income level become the driver of
consumption of sporting goods and favourable government policies and
regulations should bode well for the sporting goods industry. In
addition, global marketing of sports events raise the awareness in
sports in China and its sporting goods market is still expected to grow
strongly in the future. Meanwhile, evolving consumer tastes with
increasing preference for brands that combine personality and sports
essence drive changes in the competitive landscape from channel
expansion to product differentiation and brand innovation.

The Group is well aware of the changes in the competitive
landscape. In 2010, the Group will boost the competitiveness of the
LI-NING brand by establishing a more unique positioning and a stronger
personality through integration of activities at the branding, product
and retail levels. It will enhance product innovation and product
development to create better differentiation of its brand. It will also
drive its badminton business further and strive to attain a larger
share in the market as well as continue to expand Lotto business to
achieve healthy and sustainable growth.

The Group will enhance the performances at individual stores by
promoting reforms in its channel management system and consistently
improving its retail management capabilities. It will also optimize its
supply chain and enhance its responsiveness and flexibility to
accommodate the Group’s rapid development.

“Achieving constant breakthroughs is the lifeblood to Li Ning. We
will continue to adopt a proactive, yet prudent, strategy to deploy
more resources in building our core competencies and competitiveness
relating to brand and product. We will also continue to improve
ourselves in the area of integrating the product, retail management and
communication with consumers so as to achieve consistent and
sustainable development and hence, creating even greater value for our
shareholders and investors.” Li concluded.

*Net Cash-to-Profit Ratio = Net Cash Generated from Operating
Activities/ Profit after tax