Stock code: 2331

2008 Interim Results2008 Interim ResultsAnnouncementAnnouncement

August 2008 August 2008

We Define Our GamesWe Define Our Games

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AgendaAgenda

Financial Highlights

Business Review

Future Plans

Open Forum

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Financial HighlightsFinancial Highlights

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Five Years of Solid GrowthFive Years of Solid Growth

2,450.5

1,878.1

3,180.5

4,348.7

1,371.9

3,060.0

1,104.3788.7

1,909.4

0

1,000

2,000

3,000

4,000

5,000

2004 2005 2006 2007 2008

186.8

122.4

294.8

473.6

129.9

333.7

78.354.9

198.3

0

100

200

300

400

500

2004 2005 2006 2007 2008

138.6134.4

293.4

392.9

107.0

575.0

-43.2

32.9

149.4

-100

0

100

200

300

400

500

600

2004 2005 2006 2007 2008

45.83

28.65

13.7818.25 19.21

7.28 7.65

32.24

12.66

0

10

20

30

40

50

2004 2005 2006 2007 2008

Full year 1st half

CAGR: 40.4%

RevenueRevenueRMB Mil

Basic EPSBasic EPSRMB Cents

Profit Attributable to Equity HoldersProfit Attributable to Equity HoldersRMB Mil

Operating Cash FlowsOperating Cash FlowsRMB Mil

CAGR: 57.0%

CAGR: 104.5%CAGR: 45.1%

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Financial HighlightsFinancial Highlights

1H2008(RMB Mil)

1H2007(RMB Mil)

Change

Six months ended 30 June

Revenue 3,060.8 1,909.4 60.3%

Gross Profit 1,482.2 930.4 59.3%

Operating Profit 452.6 266.6 69.7%

EBITDA 495.3 299.2 65.5%

Profit attributable to equity holders 333.7 198.3 68.3%

Basic EPS (RMB cents) 32.24 19.21 67.8%

Interim DPS (RMB cents) 9.63 5.76 67.2%

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Revenue AnalysisRevenue Analysis by Product Categoriesby Product Categories

Gross profit margin of LI-NING brand products 1H2008 1H2007 ChangeSix months ended 30 June

LI-NING Brand Footwear 46.1% 48.3% -2.2 p.p.LI-NING Brand Apparel 50.7% 48.7% +2.0 p.p.

LI-NING Brand Accessories 49.1% 52.0% -2.9 p.p.LI-NING Brand Overall 48.5% 48.8% -0.3 p.p.

12.2% 8.0% 7.8% 6.3% 5.5%

45.3%39.9%38.4%

30.2% 33.2%

52.0%57.6% 58.8%

47.3%53.2%

1.9%1.8%

0%

20%

40%

60%

80%

100%

1H04 1H05 1H06 1H07 1H08

Stable Growth of Footwear ProductsStable Growth of Footwear Products as of Total Revenueas of Total Revenue%

LI-NING Brand Apparel

LI-NING Brand Accessories

Other Brands (AIGLE and Z-DO)

LI-NING Brand Footwear

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Northern Region

Eastern Region

Southern Region

LiLi--NingNing Brand Revenue Analysis Brand Revenue Analysis by Geographyby Geography

98.9%

1.1%International Market

Domestic Market

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40.7% 75.8%

38.9% 59.8%

17.4% 33.0%

% of total revenue revenue growth

60.1%

57.7%

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Healthy Profit MarginsHealthy Profit Margins

48.7% 48.4%48.7%48.1%

45.8% 45.8%

1H03 1H04 1H05 1H06 1H07 1H08

Gross Profit Margin%

14.0%14.8%

12.6%

10.2%10.7%

11.3%

1H03 1H04 1H05 1H06 1H07 1H08

Operating Margin%

10.4%10.9%

9.5%

7.1%7.2% 7.0%

1H03 1H04 1H05 1H06 1H07 1H08

Net Margin%

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Key Financial IndicatorsKey Financial Indicators

1H2008 1H2007 Change

Six months ended 30 June

Inventory Turnover (days) 61 71 -10

Avg. Trade Receivable Turnover (days) 47 55 -8

Avg. Trade Payables Turnover (days) 71 69 2

Cash Conversion Cycle (days) 37 57 -20

R&D Expenses (as % to cost of sales) 5.8% 5.2% 0.6 p.p.

A&P Expenses (as % to revenue) 18.7% 17.1% 1.6 p.p.

Human Resource Cost (as % to revenue) 6.6% 7.8% -1.2 p.p.

Effective tax rate (%) 25.4% 25.5% -0.1 p.p.

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Solid Financial Position & Cash FlowSolid Financial Position & Cash Flow

1H2008(RMB Mil)

1H2007(RMB Mil)

Change

Six months ended 30 June

Cash and Cash Equivalents(Including fixed deposits) 1,429.3 821.1 74.1%

Current Liabilities 1,956.0 729.8 168.0%

Non-Current Liabilities 50.3 56.2 -10.5%

CAPEX 99.7 81.7 22.0%

Total Liabilities to Total Assets Ratio 51.4% 33.9% +17.5 p.p.

Return on Equity (half-year) 18.3% 13.5% +4.8 p.p.

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Business ReviewBusiness Review

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The Winning WayThe Winning Way

Branding

Distribution Management

Supply ChainManagement

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Product R&DDesign

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OlympicsOlympics--related Promotionsrelated Promotions

Olympics-concept campaignsSponsored LI-NING branded gear to China’s National gold medal winning teamsand other international teams at the Beijing Olympics 2008CCTV partnership - reporters for thenetwork appeared in LI-NING brandedproducts during the Games

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OlympicsOlympics--related Promotionsrelated Promotions

Established flagship stores with higher standard in Olympics host andco-host citiesOlympics promotion events targeting shopping malls across China“Hero’s Assembly - LI-NING China Tour 2008”LI-NING Sports Park

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Other Innovative Marketing ActivitiesOther Innovative Marketing Activities

Tennis: ATP partnership, Sponsorship of Ivan Ljubicic

Basketball: “LI-NING-SHAQ”

Women’s fitness: Partnership withBeijing Nirvana Yoga

Local community sports: CUFL, CUBA

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Developed hi-tech kits for China’s 4 National gold medal-winning teams

Collaboration with Michelin

Applied “LI-NING BOW” to basketballand tennis footwear products

Launched the fifth generation super-lightand ventilated running shoes

R&D centers in Mainland China, HKand Oregon, the United States

AT Dry Smart technology

Unparalleled Product R&D and DesignUnparalleled Product R&D and Design

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Effective Sales Channel ManagementEffective Sales Channel Management

Set up flagship store in Olympics host and co-host cities

Launched 5th generation stores* Other brands include Z-DO and AIGLE,

No. of store 2008-6-30 2007-12-31 2007-6-30

LI-NING Brand 5,853 5,233 4,358Other Brands* 540 443 224

Aggressive expansion in 2nd and 3rd tier cities, in which 57% of the new stores are established in these cities

Strengthened the DSR team, continuous improvement in retail management and same-store-sales growth

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Flexible and Efficient Supply ChainFlexible and Efficient Supply ChainManagementManagement

Organized 2 trade fairs for LI-NING and 3 for other brands in 1H08

Improved product planning, reduced SKU and consolidated the usage of raw materials

Streamlined the logistics model to shorten transit time for deliveries

Set up a centralized procurement centre to lower procurement costs

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Replicate Core Competencies throughReplicate Core Competencies throughMultiMulti--brand Operationbrand Operation

High-end Outdoor Sports Brand

Outdoor andcasual wear

Metropolitanand 1st tier cities

Principal Brand

Professional andsports lifestyle

Focused on5 major sports

Nationwide coverage

Aggressive push in 2nd and 3rd tier cities

Positioning Sub-Brand Top Table Tennis Brand

Italian Sports Fashion Brand

ProductCategory

Classic andsports lifestyle

Table tennis equipment

Focus on tennis and soccer

Channel Hypermarkets Sports stadium, department stores,

and sports equipment stores

Metropolitan and 1st tier cities

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—— HighHigh--end Outdoor Sports Brandend Outdoor Sports Brand

Targets metropolitan and 1st tier cities

Stronger retail level support with special emphasis on consumer communications

Leverage on the Group’s distribution management experience

Product localization to cater the tastes andpreferences of the Chinese market by tapping intothe Group’s supply chain management expertiseand in-depth market knowledge

Target to breakeven in end of 2009

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—— Targets Hypermarket ChannelTargets Hypermarket Channel

Leverage on the Group’s strengths in supply chain management,product development and channel management

Established footprint in 114 cities, with 70 distributors and 506 stores

Adopts a strategy of low pricing and high quality, branded products to enjoy the first mover advantage in the hypermarket channel

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—— WorldWorld’’s Top Table Tennis Brands Top Table Tennis Brand

Completed acquisition in July 2008

Specialize in table tennis equipment:• Racket• Table• Ball• Rubber & Glue

Leverage on the Group’s strengths in product design for footwear and apparel and supply chain management to complete Double Happiness’s product offering

Tap into the Group’s distribution management expertise to develop co-branded LI-NING –Double Happiness table tennis equipment

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—— Sports Fashion BrandSports Fashion Brand

Exclusive license for 20 years in China

Tap into the rapidly growing sports fashion market in China

Leverage on the Group’s supply chain and distribution management expertise

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Outlook and Outlook and FFuture uture PPlanslans

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Indoor Sports like badminton and table-tennis are most popular sports in China, after running and basketball

Sports lifestyle segment has a higher growthpotential than professional sports segment

Urbanization and growth in disposable incomespur strong demand in 2nd and 3rd tier cities

Strong momentum after 2008 Beijing Olympics

Robust Growth inRobust Growth inChinaChina’’s Sporting Goods Sectors Sporting Goods Sector

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Strengthen product Design and R&D

Adopt multi-brand strategy to cater to theneeds of different market segments

Revamp brand’s DNA to clearly define the Group’spositioning and target consumers

Establish a benchmark sports category forthe LI-NING brand

The Next Level The Next Level ——Branding and ProductsBranding and Products

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The Next Level The Next Level ——Distribution ManagementDistribution Management

LI-NING Store Expansion Plan

As at Year End No. of Stores

2008 6,200

2009 7,000

2010 7,800

2013 Over 10,000

Two-pronged strategy:franchise model while deepening engagement with end-consumers

Objectives:• Metropolitan and 1st tier cities:

targets same-store-sales growth• 2nd and 3rd tier cities: targets further

penetration and same-store-sales growth

By 2013, the plans to establish over 10,000 stores with store efficiency more than doubled as compared to 2007

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Gear the supply chain for international expansion

Further improve cost and overall efficiency

Streamline the supply chain management to cater to theneeds and characteristics of our multi-brand portfolio1

2

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The Next LevelThe Next Level ——Supply Chain ManagementSupply Chain Management

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2009-2013: preparation stage, focus more on developing capabilities for international expansion:• Talent• Supply chain • Product design• Branding• The expansion mode

By 2018: become one of the world’s top 5sports brands,with revenue contribution of20% from international business

The Next Level The Next Level ——International ExpansionInternational Expansion

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Vision, Mission & Core ValuesVision, Mission & Core Values

Through sports,we inspire in people

the desire andpower to makebreakthroughs

Athleticism,integrity,

professionalism, passion,

breakthroughs,and trust

A world’s leadingbrand in the sports

goods industry

VISION

CORE VALUESMISSION29

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http://www.lining.comhttp://www.li-ning.comhttp://www.irasia.com/listco/hk/lining/http://www.hkex.com.hk

Investor Relations ContactTel : +86 21 5879 7298 Email : investor@li-ning.com.cn

Investor RelationsInvestor Relations