March 2015

2014 Annual Results

Disclaimer

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The information contained in this presentation is intended solely for your personal reference.

Such information is subject to change without notice, its accuracy is not guaranteed and it may not

contain all material information concerning Fuguiniao Co., Ltd. (the “Company”). The Company

makes no representation regarding, and assumes no responsibility or liability for, the accuracy or

completeness of, or any errors or omissions in, any information contained herein.

In addition, the information contains projections and forward-looking statements that may reflect the

Company’s current views with respect to future events and financial performance. These views are

based on current assumptions which are subject to various risks and which may change over time.

No assurance can be given that future events will occur, that projections will be achieved, or that the

Company’s assumptions are correct. It is not the intention to provide, and you may not rely on this

presentation as providing, a complete or comprehensive analysis of the Company's financial or

trading position or prospects.

This presentation does not constitute an offer or invitation to purchase or subscribe for any securities

or financial instruments or to provide any investment service or investment advice, and no part of it

shall form the basis of or be relied upon in connection with any contract, commitment or investment

decision in relation thereto.

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Agenda and Presenters

Photo of

Presenter 2

Photo of

Presenter 4

(If applicable)

Mr. Lu Wenli

CEO

Mr. Chan Wai Shing, Wilson

CFO

Section Presenter

Results Highlights Mr. Chan Wai Shing, Wilson

Financial Overview Mr. Chan Wai Shing, Wilson

Business Review Mr. Lu Wenli

Prospects Mr. Lu Wenli

Q&A All

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Results Highlights

Results Highlights

Revenue and profit remain stable amid tough market situation

Turnover up 1.3%

Gross profit margin up 0.9 pp

Strong e-commerce development

Online sales up 26.3%

Continue to enhance the efficiency of distribution networks

Decent progress and positive market response of health

function footwear

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Financial Overview

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Financial Overview

(Denominated in RMB’000, unless otherwise stated)

2014 2013 Change

Turnover 2,322,982 2,294,287 +1.3%

Gross Profit 917,338 886,271 +3.5%

Profit before Taxation 602,134 593,312 +1.5%

EBITDA 641,093 638,283 +0.4%

Profit for the year 451,222 443,729 +1.7%

Basic EPS (RMB) 0.84 1.10 -23.6%

Final Dividend (RMB per Ordinary

Share)0.35 0.24 +45.8%

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Financial Overview(Cont’d)

(Denominated in RMB’000, unless otherwise stated)

2014 2013 Change

Total Assets 3,113,449 2,743,061 +13.5%

Total Equity 2,193,066 1,939,697 +13.1%

Cash and Cash Equivalents 401,634 843,353 -52.4%

2014 2013 Change

Gross Profit Margin 39.5% 38.6% +0.9 p.p

Operating profit margin 26.9% 26.9% -

Net Profit Margin 19.4% 19.3% +0.1 p.p

Turnover by Product Type

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2014

(RMB’000) 2014 2013 Change

Women’s Footwear 1,172,572 1,196,638 -2.0%

Men’s Footwear 644,833 618,883 +4.2%

Menswear 485,623 473,504 +2.6%

Leather Accessories 19,954 5,262 +277.4%

Total 2,322,982 2,294,287 +1.3%

2013

Number of Units Sold and ASP

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ASP

No. of units sold

(’000) 2014 2013 Change

Footwear 8,353 8,567 -2.3%

Menswear 3,129 3,082 +1.3%

Leather Accessories 201 53 +279.2%

(RMB) 2014 2013 Change

Footwear 217.58 211.93 +2.7%

Menswear 155.20 153.64 +1.0%

Leather Accessories 99.27 99.28 --

Turnover by Brands

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(RMB’000) 2014 2013 Change

Fuguiniao 1,857,090 1,771,568 +4.8%

FGN 72,193 126,949 -43.1%

AnyWalk 50,496 45,398 +11.2%

OEM/ODM 343,203 350,372 -2.0%

Total 2,322,982 2,294,287 +1.3%

2014

2013

Turnover by Sales Channel

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(RMB’000) 2014 2013 Change

Distributors 1,594,589 1,605,926 -0.7%

Proprietary outlets 243,830 221,524 +10.1%

Large-scale institutional

purchases42,164 37,940 +11.1%

Online Sales 99,196 78,526 +26.3%

OEM/ODM customers 343,203 350,371 -2.0%

Total 2,322,982 2,294,287 +1.3%

2014

2013

Costs Analysis

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(Denominated in RMB’000,

unless otherwise stated)2014 2013 Change

Costs of Sales 1,405,644 1,408,016 -0.2%

In-house Production 772,090 733,703 +5.2%

-Raw Materials 589,356 555,128 +6.2%

-Direct Labor 107,512 108,502 -0.9%

-Production Overhead 75,222 70,073 +7.3%

Subcontracting Charges 633,554 674,313 -6.0%

Operating Expenses Analysis

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(RMB million) (RMB million)

SELLING AND DISTRIBUTION EXPENSESADMINISTRATIVE AND OTHER

OPERATING EXPENSES

EBITDA and Profit

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(RMB ‘000) (RMB ‘000)

PROFIT FOR THE YEAREBITDA

451,222

Working Capital Analysis

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INVENTORY TURNOVER DAYSTRADE AND BILLS RECEIVABLE

TURNOVER DAYS

TRADE AND BILLS PAYABLE

DAYS

(Days) (Days) (Days)

Financial Ratios

RETURN ON EQUITY RETURN ON TOTAL ASSETS CURRENT RATIO

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(%) (%) (%)

Financial Ratios

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GEARING RATIO DEBT TO EQUITYINTEREST COVERAGE

(%)

2013 2014

Net cash

position

Net cash

position

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Business Review

Brands: Fuguiniao

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The Fuguiniao brand was launched in 1991 and focused solely on men’s leather footwear. The brand has been

famous for its excellent product quality and comfortable fitting. In 1997, we expanded into the design, manufacture

and sales of women’s footwear and has won several national awards

Products sold under our Fuguiniao brand include: Men’s and women’s shoes, business casual menswear, and

leather accessories

Market Positioning: Members of the working and professional classes aged from 28 to 45

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Brands: Fuguiniao （Con’t）

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Brands: FGN

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In 2012, we launched our FGN brand as our middle-to-high brand. With FGN, we offer a range of business and

business casual footwear. The brand is popular among customers due to its excellent material quality and

fashionable design.

Products sold under our FGN brand include middle-to-high business and business casual footwear

Market Positioning: Urban population aged from 25 to 40

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Brands: FGN (Con’t)

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Brands: Anywalk

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We launched our AnyWalk brand in 2010. Under AnyWalk, we offer a range of middle-to-high fashion and casual

footwear. The brand combines fashionable design elements with untraditional materials, bringing the latest international

fashion trend.

Products sold under our AnyWalk brand includes middle-to-high end fashion and casual men and women’s footwear

Market Positioning: Younger, fashion-conscious population aged from 16 to 35

New Product Themes

Three different themes and style were launched this year to adapt to consumers’ new consumption

demand:

“New Classical Style” / “New Business Style” / “New Comfortable Style”

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New Product Themes (Con’t)

“New Classical Style”

“New Business Style”

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Sales and Distribution Network

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POS Breakdown by Store Type

Total: 3,144

2014 2013

No. of Retail Outlets 3,144 3,359

No. of Distributors 61 60

Sales and Distribution Network (Cont’d)

Taken a more conservative approach in expanding retail network in 2014 in

line with our business growth and to ensure the profitability of the retail

stores

Set out uniform standards for store decoration and displays, marketing

activities and daily operations for distributors and third-party retailers to

provide uniform and quality services across retail network

Required distributors and third-party retailers to obtain the Group’s approval

for the final location of each retail outlet

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Inventory and Product Development

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Launched an in-house developed online trading platform to facilitate

distributors in managing their inventory levels

Sales orders from trade fairs enabled a more efficient management

of the Group’s inventory of raw materials and finished products

Our strong in-house research, design and development capabilities

have been critical to our success

Capable to introduce over 1,500 Stock Keeping Units (SKUs) into

the market for branded footwear products and approximately 300

SKUs for business casual menswear products for each season

Our combined annual self-production capacity was approximately

5.8 million pairs of footwear with effective usage of machine in

production process

Inventory

Management

Product

Design

Production

E-Commerce

With e-commerce, consumers are more prone to focusing on the characteristics of the footwear

and apparel products. In the footwear and apparel industry, the “product-oriented” era is gradually

replacing the “channel-oriented” era.

With the long-standing reputation of high quality and comfort of the Fuguiniao brand, we believe

that the Company still has strong core competence in this “product-oriented” era of e-commerce.

In early August 2014, the Company launched a We Chat platform which has commenced

operation.

In late August 2014, the Company launched a new O2O platform, leveraging interactive

membership management to realise precision marketing.

The introduction of the We Chat platform and O2O platform will play a crucial role in paving the

path for the Company to enter the e-commerce sector.

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Marketing and Promotion

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Engaged in advertising campaigns, fashion

shows and department store promotional

events to increase brand awareness

Continued to engage Mr. Lu Yi (陆毅), a well-

known actor in the PRC, to be the

ambassador of business casual menswear

products

Continued to hold fashion shows in

the Group’s trade fairs in 2014 and

displayed advertising videos to

promote brands and presented

newly-released footwear and

menswear collections

Organized product theme

promotions in department stores and

invited singers, actors and other

PRC celebrities to participate in

these promotional events

Marketing and Promotion (Con’t)

Mr. Luyi features Fuguiniao’s business menswear series

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Trade Fairs

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• Hold national trade fairs each year in:

– March, May, September and November for the autumn, winter, spring and summer

collections of Fuguiniao and FGN branded footwear and Fuguiniao branded leather

accessories

– April and September for the autumn/winter and spring/summer collections of AnyWalk

branded footwear and Fuguiniao branded menswear

• Attendees include our existing or potential distributors, as well as certain

third-party retailers and retail store managers

• Distributors can place orders with us directly and third-party retailers and

retail store manager can place orders through our distributors

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Prospects

Business Strategies

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Refine the offline sales and distribution network and

enhance same-store operating efficiency

Include e-commerce as the key development strategy and

identify suitable e-commerce enterprises as targets for

merger and acquisition

Actively explore sales and large group purchase

opportunities on overseas e-commerce platforms

Further promote the brands to increase brand awareness

Adopt thematic product design and marketing ideas

Focus on promoting the Fuguiniao Health Function Footwear

series throughout the country

Continue to enhance the information systems technology so

as to strengthen the vertically integrated business model7

Business Strategies

– O2O and Wechat Marketing Model

• Include e-commerce as key development strategy and focus efforts on

increasing e-commerce as a percentage of the total sales of the Company

– Increase the infrastructure investment in Online-to-Offline (“O2O”) and the WeChat platform

– Establish an independent team to proactively explore the opportunities to market the

Company’s products on overseas e-commerce platforms

– Increase human resources for the management and development of its existing domestic e-

commerce operations.

• Increase the use of WeChat

– Quickly disseminate information about new stores and marketing information as well as

accumulate e-commerce end-customers

– Implement precision marketing by encouraging distributor customers to focus more efforts on

stores and technology in order to increase the frequency of retail sales

• Actively seek targets for merger and acquisition

– Cross-border e-businesses will be the targets for merger and acquisition so as to speed up

the expansion of the overseas online business

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Business Strategies – Health Function Footwear

• Ample potential of development

– One of the targeted new industries supported by PRC government

– Aging population, Sub-health state and the climate change in environment

– Rising awareness of healthcare among Chinese consumers

• The Group introduced Health Function Footwear in 2014

– Designed according to new technology, ergonomics and human mechanics

• Entered into the Fuguiniao Health Function Footwear

Cooperation Project Agreement with Wuhan Union Hospital under

Tongji Medical College, Huazhong University of Science & Technology

– Entrust the party to conduct a clinical trial on “The ability of Fuguiniao Health

Function Footwear to improve the microcirculation in feet and relieve the

discomfort of the spine and knee joint” and prepare a clinical report.

• Entered into the Strategic Cooperation Agreement with Huazhong

University of Science & Technology

– Provide theories, experimental basis and clinical certification for particular

products of the Company with its strong scientific research capability

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Q&A