Dear Shareholders,

On behalf of the Board, I am pleased to present our annual results for the year ended 31 December 2016.

THREE YEARS OF RECORD-BREAKING RESULTS

During the year, demand for our differentiated, value-for-money ANTA products continued to grow. In addition, with notable growth in our ANTA KIDS, FILA and our e-commerce businesses, we recorded a 20.0% increase in revenue to RMB13.35 billion (2015: RMB11.13 billion). Profit attributable to equity shareholders rose by 16.9% to RMB2.39 billion (2015: RMB2.04 billion), with basic earnings per share amounting to RMB95.36 cents (2015: RMB81.66 cents). The Group’s revenue and profit attributable to equity shareholders not only set new records, but have more than quadrupled over the past decade. To reward our shareholders, the Board has proposed a final dividend of HK34 cents per ordinary share (2015: HK30 cents) and a special dividend of HK8 cents per ordinary share (2015: HK8 cents), together with an interim dividend of HK34 cents per ordinary share (2015: HK30 cents) which was paid in September 2016, representing a payout ratio of 70.2% of profit attributable to equity shareholders for the year (2015: 69.8%).

2016: A YEAR OF REVOLUTION, INNOVATION AND HIGH EFFICIENCY

Last year China underwent unprecedented economic reforms against a backdrop of challenging global economic conditions; and such uncertainty would dominate the global economy in the next five years. Nevertheless, the outlook for the sports industry continues to look promising, with some saying that the next ten years will be a golden decade for the industry. By 2025, China’s sports industry is expected to be RMB5 trillion in size. We are now ushering in the new 4.0 phase of our “Single-focused, Multi-brand, Omni-channel” strategy after becoming the first Chinese sportswear company to reach the RMB10 billion revenue mark.

During the past year, as the Group had sought to work with a spirit of “revolution, innovation and high efficiency”, we have seen significant growth across all our brands and in our e-commerce business. With the Chinese Sports Delegation’s participation in the 2016 Rio Olympics, ANTA’s brand equity and reputation experienced uplift from its “Go Surprise Yourself” marketing campaign. We could not have been more proud to have been part of history in the making, as one after another, Chinese champions stepped onto their respective podiums wearing the ANTA Champion Dragon Outfit. Last year will also be remembered as a groundbreaking year for NBA star Klay Thompson, one of ANTA’s endorsers, who continued to progress his career and set NBA records with his namesake shoes, the KT series. Last but not least, we ended the year on a high note by enlisting Manny Pacquiao, the legendary boxing champion, as an ANTA brand endorser, to collaborate with us on the promotion of ANTA’s professional cross training sportswear.

FILA continued to outperform and maintained its high growth momentum. In addition to launching the cross-over Jason Wu X FILA collection, we also featured famous actress, GaoYuanyuan, in our latest promotion campaign to showcase the chic and elegant design of FILA’s products. On the e-commerce business front, the “Double 11” online shopathon in November saw the Group recording over 100% year-on-year growth in its online revenue. Equally important, we officially introduced the DESCENTE business into the high-end sportswear market in China with the opening of the first DESCENTE store in August. The store sells a wide range of professional gear for sports such as skiing, cross-training and running, and has generated a buzz within China’s high-end sports market.

THE MAKING OF THE “ANTA WAY”– THE PATH TO SUSTAINABLE GROWTH

Last year was the prelude to a new era as the Group officially introduced the 4.0 phase of its “Singlefocused, Multi-brand, Omni-channel” strategy, which confirms our growth strategy for the next five years and puts us on a path for the next decade. The road to achieving these strategic goals is built upon a foundation of shared values and teamwork supported by a strong corporate culture. Only when we are guided by the shared belief of being consumer-centric over all else, together with deep-rooted values of devotion, innovation and pushing ahead, respect and appreciation, integrity and gratitude, bonding us together, so we can travel the “ANTA Way” together.

  1. Be Consumer-Centric
  2. “Be Consumer-Centric” aims to strategically position the ANTA brand to manufacture products that meet consumers’ demand and fulfil their needs. Not only each of the brand should satisfy different consumer demand, but also provide them with an enhanced experience. This requires us to conduct comprehensive preliminary studies before planning every single product line so that we can develop products with a thorough understanding of consumers in mind. In line with our “Next Step will be the Client” ethos, we ensure to keep in step with the needs of consumers by committing ourselves to excellence. We will also build a major data consumer platform and establish global consumer research centers, which will lay the foundation for our R&D projects. Meanwhile, we also plan to set up a consumer experience index, ultimately with the aim of improving the overall consumer experience.

  3. Strive for Strong Market Position
  4. “Strive for Strong Market Position” looks to bolster the brand’s market influence by establishing a bigger bargaining power in the market, which in turn will consolidate our competitive market position. We believe only market leaders are able to reform the market structures, predict future trends and create consumption demand. Only when we pursue to become the market leader, we can dream big and motivate everyone in the Group to strive for our goal.

  5. Motivate by Commending Contributors
  6. Needless to say, we are only as good as our team. We need to establish the right mechanisms to measure and reward those who contribute to our success. We believe in “learning from our company’s role models together” in order to realize our goals. Every staff at the Group knows that they should devote to their best, in which this commitment is one of the cornerstones of our success. This is enhanced by the performance of some outstanding members who lead the standard for others at the Group. We will continue to encourage them, reward them and help them meet their career goals. We believe it is imperative that such members are made to feel valued, satisfied and respected.

  7. Innovation as the Key to Survive
  8. Our product is the cornerstone and fundamental of our success. In order to produce excellent products, we should ‘innovate’. Innovation has always been a major pillar of our business ideology, and we believe firmly in the idea that “we will not succeed without innovation”. Constant innovation is a fundamental factor that transforms an enterprise from being merely “good” to being “great”, which is crucial for maintaining sustainable business growth and longevity. To that end, the success of our continuous increase in R&D investment is coming to fruition. In addition to our design centers in Japan and Hong Kong, we established our latest R&D and design center in the US this year with the aim of globalization. We have also recruited a large number of international talent in recent year. We put innovation first, and have started revitalizing the mechanisms, workflows and culture that underpins our innovative spirit.

    The “ANTA Way” is the key to our Group’s future. History will be made by those who are willing to change and dare to be different. The Group looks forward to its continuing role as a driving force behind the sports market’s golden era, and to continuing our progression towards achieving our goals.

“FIGHT ON” AND EMBRACE THE NEXT GOLDEN DECADE

Looking ahead, healthy living will continue to be at the forefront of everyone’s minds and sports will become more professional. As consumers are trading up, the number of people in low to low-middle income classes will continue to decrease from now until 2025. The next 10 years will see the sports shoes and apparel markets expand, driven by mainly demand from the middle to mid-upper classes as their spending continue to see significant increase.

Future opportunities are likely to be found within the transformation of retail channels, which are reinventing traditional core channels to include shopping centers and e-commerce; specific sports categories, such as running, indoor training, outdoor sports, basketball, soccer and winter sports; and the sizable kidswear market. We hope to capture every opportunity and to provide a greater range of enhanced sports products to consumers in 2017.

Lastly, on behalf of the Board, I would like to extend my gratitude to our shareholders for their continuous support, and I would also like to express my sincere thanks to all employees for their dedication and contributions to the Group. As a team, the Group is committed to achieving steady growth while creating more value for our shareholders in the long-run.

Ding Shizhong Chairman Hong Kong, 22 February 2017