Annual Report - Li Ning

Management Discussion and Analysis (Continued)
RESULTS REVIEW
Key Financial Indicators
Key financial indicators of the Group for the year ended 31 December 2006 are summarised as follows:
Year ended 31 December Change
2006 2005 (%)
(Reclassified–
Note 7)
Items of income statement (audited)
(All amounts in RMB thousands unless otherwise stated)
Turnover 3,180,543 2,450,536 29.8
Gross profit 1,508,552 1,126,189 34.0
Operating profit 402,518 271,497 48.3
EBITDA (Note 1) 438,407 296,435 47.9
Profit attributable to equity holders 294,846 186,800 57.8
Basic earnings per share (RMB cents) (Note 2) 28.65 18.25 57.0
Selected financial ratios (audited)
Gross profit margin (%) 47.4 46.0
Operating profit margin (%) 12.7 11.1
Margin of profit attributable to equity holders (%) 9.3 7.6
Effective tax rate (%) 26.4 31.1
Return on equity holders’ equity (%) 23.0 17.2
Debt to equity holders’ equity ratio (Note 3) 0.53 0.35
Average inventory turnover (days) (Note 4) 70 84
Average accounts receivable turnover (days) (Note 5) 55 44
Average trade payables turnover (days) (Note 6) 67 68
Notes:
1. EBITDA refers to earnings before interest, tax, depreciation and amortisation.
2. The calculation of basic earnings per share is based on the profit attributable to equity holders for the year ended 31 December 2006 of RMB294,846,000 (2005:
RMB186,800,000) and the weighted average of 1,029,030,000 ordinary shares in issue during the year less shares held for the Restricted Share Award Scheme (2005:
1,023,827,000 shares).
3. The debt to equity holders’ equity ratio is based on total liabilities divided by equity holders’ equity as at 31 December.
4. The calculation of average inventory turnover (days) is based on the average of opening and closing inventory balances divided by the cost of sales and multiplied by
365 days.
5. The calculation of average accounts receivable turnover (days) is based on the average of opening and closing balances of accounts and notes receivable divided by
turnover and multiplied by 365 days.
6. The calculation of average trade payables turnover (days) is based on the average of opening and closing balances of trade payables divided by total purchases and
multiplied by 365 days.
7. See note 2.23 to the consolidated financial statements.
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