03070 Peak Sport IR 2013 Cover

Peak Sport Products Co., Limited 司公限有品用育體克匹

www.peaksport.com

Peak Sport Products Co., Limited 告報期中中期報告匹克體育用品有限公司 (Incorporated in the Cayman Islands with limited liability) Peak Sport Products Co., Limited （於開曼群島註冊成立的有限公司） Stock Code 股份代號： 1968 匹克體育用品有限公司 MISSION 使命 To facilitate the development of global sports business and to provide quality sports products and services for the betterment of human health 積極促進全球體育事業發展，為人類健康生活提供優質體育用品及服務 VISION 願景 To become an internationally renowned sportswear brand that can be sustainable for centuries 成為國際知名體育用品品牌，打造百年卓越企業 CORE VALUE 核心價值 United, practical and effective Pragmatic, conscientious and diligent People-oriented, creating value for customers and society Making dreams come true through team work

團結、求實、高效實事求是、盡心盡職、用心做好每件事以人為本，為顧客及社會創造價值以團隊精神成就夢想 CONTENTS Financial Summary 2 Financial Highlights for the First Half of 2013 3 Corporate Information 4 Management Discussion and Analysis 6 Review Report on the Interim Financial Report 33 Interim Financial Report 34 Supplementary Information 53 Glossary 60 2 InterimInterim ReportReport 2013 5. 4. 3. 2. 1. Notes: SUMMARY FINANCIAL Average tradereceivablesandbillsreceivableturnoverdays (Note 4) Average inventoryturnoverdays(Note3) Working capitaldata Average tradepayablesandbillspayableturnoverdays(Note 5) Gearing ratio(Note2) Shareholders’ equity Non-current assets Assets andliabilitiesdata Turnover Profitability data Effective taxrate Net profitmargin Gross profitmargin Profitability ratios Diluted earningspershare(RMBcents) Basic earningspershare(RMBcents) Net profitfortheperiod Net assetvaluepershare(RMByuan) Non-current liabilities Current assets Research anddevelopmentexpenses Staff costs Advertising andpromotionexpenses Operating ratios(asapercentageofturnover) Return onequity(annualised)(Note1) Current ratio Current liabilities Gross profit sales andmultipliedbythenumberofdays fortheperiod/year. Average tradepayablesandbillspayableturnover daysisequaltotheaverageofopeningandclosingtradepayables bi turnover andmultipliedbythenumberof days fortheperiod/year. Average tradereceivablesandbillsreceivable turnoverdaysisequaltotheaverageofopeningandclosingtradereceivabl the period/year. Average inventoryturnoverdaysisequalto theaverageofopeningandclosinginventorydividedbycostsalesm The calculationofgearingratioisbasedon thetotalbankloansdividedbyequity. Return onequityisequaltothenetprofit fortheperioddividedbyaverageofopeningandclosingequity. Six monthsended (RMB million) (RMB million) 30 June2013 30 June2013 Six monthsended30June 4,094.3 4,364.2 1,172.9 34.0% 15.4% 13.4% 11.2% 37.7% (days) As at 398.8 193.2 888.0 811.3 7.7% 2.5% 4.4% 2013 4.29 4.29 89.9 1.95 151 es andbillsreceivabledividedbythe 4.9 45 85 ultiplied bythenumberofdaysfor lls payabledividedbythecostof 31 December2012 31 December2012 (RMB million) (RMB million) Year ended 1,612.9 4,083.1 4,241.9 14.9% 37.7% 12.2% 11.3% 12.2% 11.8% 20.9% 11.42 11.42 239.7 608.6 898.8 806.7 (days) 0.9% As at 2012 1.95 66.7 127 4.7 48 80 FINANCIAL HIGHLIGHTS FOR THE 3 FIRST HALF OF 2013

Turnover declined by 27.3% to RMB1,172.9 million

Gross profit declined by 34.5% to Limited Sport Products Co., Peak RMB398.8 million with gross profit margin at 34.0% Profit for the period attributable to equity shareholders declined by 62.5% to RMB89.9 million (increased by 26.8% when compared to the second half of 2012) with net profit margin at 7.7%

Basic and diluted earnings per share amounted to RMB4.29 cents

Interim dividend of HK2 cents (equivalent to approximately RMB1.6 cents) per ordinary share and special interim dividend of HK6 cents (equivalent to approximately RMB4.8 cents) per ordinary share were declared

Number of authorized Peak retail outlets was 6,194, representing a net decrease of 289 outlets from the end of 2012 4 Interim Report 2013 Dr. Mr. Dr. Audit BOARD Dr. Independent Mr. Mr. Ms. Non-executive Directors Mr. Mr. Mr. XuJingnan Executive Directors BOARD OFDIRECTORS INFORMATION CORPORATE Dr. Mr.

Ouyang Xiang Xiang Ouyang Wang Zhu Shen Xu Xu Wang Wu

Committee

Zhida Zhihua

Tigao Linan

Nanpeng

Bing Bing Mingquan Mingquan

Zhonghui Zhonghui

COMMITTEES

(

許志達 ( (

( ( ( 吳提高朱立南 Non-executive 許志華項兵項兵 ( 許景南

( 沈南鵬 ) )

)

( ( (Chairman) ) ) ( ( 王明權王明權 ) 歐陽鐘輝歐陽鐘輝 )

(Chairman) ) ) ) ) )

Directors Mr. Mr. Dr. Dr. Dr. Mr. Mr. Mr. AUTHORIZED Mr. COMPANY Mr. Nomination Dr. Remuneration

Ouyang Ouyang Xiang Xiang Xu Shen Tsoi Wang Xu Tsoi Wang

Jingnan Zhihua

Ka Ka

Nanpeng

Bing Bing Mingquan Mingquan

Zhonghui Zhonghui Ho Ho

Committee

( ( ( 許志華項兵項兵 ( ( (

蔡家豪蔡家豪許景南 Committee

SECRETARY ( 沈南鵬 ) )

( ( (Chairman) ( ( 王明權王明權 ) 歐陽鐘輝歐陽鐘輝 REPRESENTATIVES ) ) )

CPA, ACA,FCCA ) ) )

(Chairman) ) ) 89 Cayman Grand P.O. Fujian Tower Donghai, Units PRINCIPAL Dongbao Peak PLACE OFBUSINESSINTHEPRC HEAD OFFICEANDPRINCIPAL Cricket REGISTERED IN

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BUSINESS Wanchai, The China Hopewell China Shops www.peaksport.com COMPANY Bank PRINCIPAL Computershare SHARE KPMG AUDITOR OFFICE

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Construction CITIC 1712–1716,

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REGISTRAR Bank SShane Battier

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5 Peak SportSport Products Co., Limited 6 Interim Report 2013 the firsthalfof2013. Except fortheUSeconomy,worldeconomylostdirections during weakening demandsfromdevelopedcountriesduringtheperiod. countries alsoexperiencedsetbacksintheireconomiesdue to countries werestillplaguedbyadebtcrisis.Mostdeveloping number ofEuropeancountriesin2013.Inaddition,certain European during theperiodwithexpectationsofnegativegrowthfor quite a period. TheeconomyinEurope,however,wasstillvulnerable market intheUShavebeenpickingupgraduallyduring Reserve. Consumptionexpenditure,labourmarketandproperty down ofthequantitativeeasingmonetarypolicybyUSFederal of 2013asevidencedbytherecentannouncementwind the USeconomyhasbeenrecoveringsteadilyduringfirsthalf and excessivecapacitiesinmanyindustries.Ontheotherhand, aggravate theproblemsofassetbubbles,duplicatedinvestments expansion policytostimulatetheeconomylestitwould has becomehesitantinusingagainamonetary seems thatthecentralgovernmentofChina sector, remainedweakduringtheperiod.It affected byslackdemandintheexport 2013. Domesticconsumption,whichwas momentum duringthefirsthalfof The economyinChinastilllacked Global economicconditions Market Overview AND ANALYSIS DISCUSSION MANAGEMENT Shane Battier or recoverywilloccurinthenearfuture. may vary.Thereisahighchancethatrebound inventories, therecoverytimeforeachcompany companies havedifferentquantitiesofexcessive their excessiveinventories.Asdifferentsportswear replenish newproductsaftertheyhaveclearedall will pickupwhendistributorsandretailers destocking willcontinueforawhileandthensales returned toareasonablelevel.Itisexpectedthat channels, notablyrentalsinmanylocationshave industry andoperatingcostsofdistribution of smallsportswearcompanieshaveexitedthe industry isneartheendasaconsiderablenumber during thefirsthalfof2013.Rationalization lingering atthetroughofbusinesscycle The sportswearindustryinChinahasbeen Sportswear industryinChina sportswear industry. optimistic aboutthefuturedevelopmentof industry. Inthisconnection,theGroupisvery market sharewhensmallcompetitorsexitthe because theywillfacelesscompetitionandgain the remainingsportswearcompanieswillbenefit resulting fromthecurrentrationalization,mostof the concentrationofsportswearindustry products inChina.Further,withtheincrease consumption andhencedemandforsports from China,indirectlyboostingdomestic US economywillstimulatedemandforexports the comingyears.Inaddition,improvementsin sportswear industryhasgoodgrowthpotentialin continue theprocessofurbanization, encouraging domesticconsumptionandto determination torestructureitseconomyby Against thebackdropofChinesegovernment’s Prospects 7 Peak Sport Products Co., Limited 8 Interim Report 2013 DDorell Wright o r e l l

W r i g h t SShane Battier h a n e

B a t t i e r CCarl Landry a r l

L a n d r y

AAndrew Goudelock n d r e w

G o u d e l o c k 9 Peak Sport Products Co., Limited 10 Interim Report 2013 . Northernregionincludes Heilongjiang,Jilin,Liaoning,InnerMongolia, Hebei,Beijing,Tianjing,Shanxi,Shaanxi, Gansu,N Easternregionincludes Shandong,Jiangsu,Shanghai,Zhejiang,Henan, Anhui,Hubei,HunanandJiangxi. 3. Southernregionincludes Fujian,Guangdong,Hainan,Guangxi,Guizhou, Chongqing,Sichuan,YunnanandTibet. 2. 1. Geographicallocations(i.e.provinces orcities)inChinaareclassifiedintothreeregionsasfollows: Notes: Analysis ofturnoverbygeographicallocation: and theratioofturnovercontributedbyapparelproductsincreased. of 2013.Asaresult,theturnoverapparelproductswasboostedtolevelhigherthanthatfootwear products, itoffereddistributorsspecialdiscountsonmoreapparelproductsthanfootwearduringthefirsthalf from 50.3%inthefirsthalfof2012.AsGrouphadmoreinventoryapparelproductsthanthatfootwear the firsthalfof2012whilecorrespondingratioforapparelproductsincreasedto56.7%in2013 The ratioofturnovercontributedbyfootwearproductsdecreasedto40.6%inthefirsthalf2013from46.7% Analysis ofturnoverbyproductcategory: demand fornewproductsduringtheperiod. mainly attributabletosustainedindustry-widedestockingandthesluggisheconomywhichadverselyaffected million), representingadeclineof27.3%whencomparedtothatforthesameperiodin2012.Thedecreasewas The Group’sturnoverforthefirsthalfof2013amountedtoRMB1,172.9million(First2012:RMB1,612.9 Turnover Financial Review Analysis Discussion and Management Total Australia Africa North America Europe Total China market Northern region(Note3) Eastern region(Note2) Accessories Apparel Footwear Southern region(Note1) Asia Overseas markets South America (continued) (million) mlin turnover (million) ,7. 100.0 1,172.9 100.0 1,172.9 6. 56.7 40.6 665.6 475.8 7. 14.8 174.0 85.2 22.4 28.0 34.8 998.9 262.6 328.4 407.9 RMB M %of RMB 152.7 31.5 691.4 1.5 3.5 8.0 16.9 17.8 41.0 94.2 . 0.2 0.2 1.8 2.3 2013 2013 Six monthsended30June Six monthsended30June turnover % of (million) mlin unvr(%) turnover (million) ,1. 0. (27.3) 100.0 1,612.9 (29.5) 87.8 1,416.5 (27.3) 100.0 1,612.9 1. 03(18.0) (36.8) 50.3 46.7 811.8 753.3 9. 22(11.4) 12.2 196.4 (24.4) (37.0) 21.5 32.3 34.0 (25.5) 347.3 521.6 547.6 RMB M fChange %of RMB 7830(34.1) 3.0 47.8 8643(96.6) (23.2) 3.5 47.0 4.3 1.4 2.4 4.0 68.6 22.0 39.6 64.1 . . 20.0 0.1 2,866.7 0.0 1.5 0.6 2012 2012 turnover ingxia, QinghaiandXinjiang. % of Change (%) Tony Parker 11 Peak Sport Products Co., Limited 12 Interim Report 2013 . Average unit sellingpriceofeachproductcategoryrepresentstheturnover thatproductcategory fortheperioddivided 2. product Wehave not includedtherespectiveinformationofouraccessoryproductsbecause wehaveabroad rangeofaccessory 1. Notes: Analysis ofaverageunitsellingpriceandsalesvolumebyproduct category: Selling priceandvolume Analysis ofcontributiontogrossprofitbyproductcategory: Gross profit demand duetoimprovementineconomicconditionsNorthAmerica. South EastAsiaandMiddleduetorelativelystableeconomicconditionsintheseregions;(iii)increased deteriorating economicconditionsinanumberofcountriesAfricaandSouthAmerica;(ii)steadygrowthsales first halfof2013wasaneteffectcausedmainlyby:(i)decreaseddemandduetopoliticaldisturbancesand economy prevailinginthefirsthalfof2013.Thedecreaseturnoverderivedfromoverseasmarketsduring derived fromtheChinamarketwasprimarilyattributabletosustainedindustry-widedestockingandsluggish by 29.5%and11.4%respectivelywhencomparedtothoseforthesameperiodin2012.Thedecreaseturnover turnover duringthefirsthalfof2013.ThederivedfromChinamarketandoverseasmarketsdeclined The Chinamarketcontributed85.2%ofthetotalturnoverwhileoverseasmarkets14.8% Analysis Discussion and Management of footwearproducts. more apparelproductsthanfootwearproducts,thegrossprofitmarginofdecreasedthat distributors soastopromotethesalesofnewproductsduringperiod.AsGroupofferedspecialdiscountson so astoclearexcessiveinventories;and(ii)anincreaseintheamountofregulardiscountsofferedbyGroup mainly dueto:(i)anincreaseintheamountofspecialdiscountsofferedbyGrouptodistributorsduringperiod and 4.8percentagepointsrespectivelywhencomparedtothoseforthesameperiodin2012.Suchdecreaseswere The grossprofitmarginsoffootwearandapparelproductsinthefirsthalf2013decreasedby2.8percentagepoints Accessories Apparel Apparel (pieces) Footwear (pairs) Footwear Total of unitprice.Webelievethataunit-based analysisofthisproductcategorywouldnot be meaningful. (continued) Quantity (million) 3648.9 13.6 sold . 89.8 5.3 2013 Average unit Six monthsended30June selling price M mlin (%) RMB (million) Gross profit (RMB) 9. 34.0 33.4 398.8 34.7 222.5 165.0 1335.7 11.3 2013 Six monthsended30June Gross profit Quantity (million) margin 595. 1.)(4.3) (14.5) 51.1 15.9 sold . 76(84 2.5 (38.4) 87.6 8.6 02Change 2012 Averageunit selling price M mlin % (%points) (%) RMB (million) Gross profit (RMB) 0. 77(3.7) (4.8) 37.7 (2.8) 38.2 608.6 37.5 310.3 282.2 613. (2.0) 33.7 16.1 2012 Gross profit by itsquantitysoldfor theperiod. Quantity margin s thatvarysignificantlyinterms sold (%) Average unit selling price gross profit Change in margin (%) Analysis ofturnover(atwholesalelevel)bynumberretailoutletsandfloorareainChina: Average turnoverperretailoutletandunitfloorarea sales ofapparelproductsduringthefirsthalf2013. mainly becausetheGroupofferedspecialdiscountsonmoreapparelproductsthanfootwearproducts,boosting during theperiod.Thequantitiessoldforapparelproductsdecreasedataratelowerthanthatfootwear sustained industry-widedestockingandthesluggisheconomywhichadverselyaffecteddemandfornewproducts the period.Thedecreasesinquantitiessoldforbothapparelandfootwearproductsweremainlyattributableto decreased mainlybecausetheGroupofferedspecialdiscountsonmoreapparelproductsthanfootwearduring prices waslowerthanthatoftherelatedcostproduction.Theaverageunitsellingpriceforapparelproducts Group raisedthesellingpricesoffootwearproductsduringperiodalthoughrateincreasein The averageunitsellingpriceforfootwearproductsincreasedslightlyduringthefirsthalfof2013mainlybecause during thefirsthalfof2013. industry-wide destockingand the sluggisheconomy demand forsportsproductscaused bysustained turnover wasinturnduetothedecrease derived fromtheChinamarket.Thedeclinein decreases wereinlinewiththedeclineturnover compared tothoseforthesameperiodin2012.Such 2013 decreasedby17.3%and21.7%respectivelywhen average turnoverperunitretailfloorareainChinaduringthe firsthalfof image. TheaverageturnoverperauthorizedPeakretailoutlet inChinaandthe accommodate ourincreasingproductofferingsandtomatch ourenhancedbrand with theGroup’sstrategytoincreasegraduallysizeofour newoutletsto metres asat30June2013from83.4square2012,whichwasinline The averagefloorareaperauthorizedPeakretailoutletinChinaincreasedto88.6square . Averageturnoverperunitretailfloorareaisequaltothetotal(China market)dividedbytheaveragetotalretai 2. Averageturnoverperretailoutletisequaltothetotal(Chinamarket) dividedbytheaveragenumberofretailout 1. Notes: 0270959068. ,3 0,5 9 2.3 1.8 191 158 603,254 555,201 7,433 6,339 83.4 88.6 589,046 548,536 7,059 (12.3 6,194 Change (%) 2012 2013 of theopeningandclosingtotalretailfloorareasforperiod. the openingandclosingnumbersofretailoutletsforperiod. outlets No. of retail sa 0Jn Sixmonthsended30June As at30June ) retail floor s.m)(q . s.m)(M'0)(RMB'000) (RMB'000) (sq.m.) (sq. m.) (sq. m.) Total area (6.9 ) floor area per retail Average outlet . (14.7 6.2 Average Nt )(oe2 Nt )(Note2) (Note1) (Note2) (Note 1) outlets no. of retail ) total retail floor area Average (8.0 ) l floorarea,whichisequaltotheaverage per retail turnover lets, whichisequaltotheaverageof Average outlet (17.3 ) turnover per unit retail floor area Average (21.7 ) 13 Peak Sport Products Co., Limited 14 Interim Report 2013 net effectcaused mainlybythefollowingitems whencomparedtothosefor thefirsthalfof2012:(i)increased million), representinganincrease of23.8%whencomparedtothoseforthesameperiod in2012.Theincreasewasa Total administrativeexpensesfor thefirsthalfof2013amountedtoRMB121.0million(First halfof2012:RMB97.7 Administrative expenses distributors, thereductionofwhich wereinlinewiththedecreaseGroup’sturnover duringtheperiod. decrease wasmainlyattributabletodecreasedadvertisingand promotionactivities,anddecreasedsubsidiesto RMB226.6 million),representingadecreaseof30.1%when comparedtothoseforthesameperiodin2012.The Total sellinganddistributionexpensesforthefirsthalfof2013 amountedtoRMB158.4million(Firsthalfof2012: Selling anddistributionexpenses mainly duetoareductionintheprofitderivedfromsale ofmaterialsduringtheperiod. the increaseinotherrevenue.Othernetincomedecreased to RMB2.7million(Firsthalfof2012:RMB5.7million) in timedepositsbytheGroupduringperiod.Theincrease intheamountofgovernmentgrantsalsocontributedto because interestincomederivedfrombankdepositsincreased asaresultofplacementmoreexcessworkingcapital Other revenueforthefirsthalfof2013increasedtoRMB28.4 million(Firsthalfof2012:RMB15.4million)mainly Other revenueandothernetincome Analysis ofcostsalesbyproductionmethod: Cost ofsales Analysis Discussion and Management respectively. the firsthalfof2013increasedto67.9%and35.8%from58.3%32.2%forsameperiodin2012 and apparelproductsduringtheperiod.Theself-productionratiosbyvolumeforfootwear in thefirsthalfof2012.Suchincreasewasprimarilyduetoincreasesself-productionratiosforbothfootwear The ratiooftotalcostself-productiontosalesincreased44.4%inthefirsthalf2013from38.9% cost ofself-productionwhencomparedtothosethesameperiodin2012. in theratioofdirectlabourcosttototalself-productionandadecreaserawmaterials An increaseintheperunitdirectlabourcostduetoshortageduringfirsthalfof2013causedan Raw materials Self-production Total Overhead OEM Self-production Cost ofsales Direct labour Total Subcontracting arrangements (continued) (million) 4. 44.4 343.5 100.0 343.5 62.5 214.7 7. 100.0 24.6 31.0 774.1 190.5 240.1 RMB 4515.9 21.6 54.5 74.3 2013 Six monthsended30June % of total (million) ,0. 0. (22.9) 100.0 1,004.3 9. 89(12.1) 38.9 (12.1) 390.6 100.0 (16.4) 390.6 65.7 256.8 8. 83(32.9) (27.2) 28.3 32.8 283.8 329.9 RMB 581. (2.3) (4.7) 14.3 20.0 55.8 78.0 2012 % of total Change (%) 15 Peak Sport Products Co., Limited Sport Products Co., Peak

JJaValeaVale McGeeMcGee 16 Interim Report 2013 2013 wasprimarilyaresultof: (i)adecreaseingross decrease innetprofitmargin during thefirsthalfof of 2013from14.9%forthesame periodin2012.Such Net profitmargindecreasedto 7.7%forthefirsthalf items (i)and(iv). items (ii)and(iii)onlypartiallyoffsettheimpactof and (v)adecreaseinincometax,whichtogetherwith expenses; (iv)anincreaseinadministrative revenue; (iii)adecreaseinsellinganddistribution decrease ingrossprofit;(ii)anincreaseother the firsthalfof2013wasprimarilyaresultof:(i) same periodin2012.Suchdecreasenetprofitduring the firsthalfof2013fromRMB239.7millionfor Net profitdecreasedby62.5%toRMB89.9millionfor Net profitandnetmargin withholding taxduringtheperiod. interim dividendincreasedtheprovisionforrelevant starting from2013;and(ii)thepaymentofspecial in 2012whiletheynolongerenjoythetaxconcession two subsidiariesoftheGroupenjoyedataxconcession 20.9% forthesameperiodin2012mainlybecause:(i) rate forthefirsthalfof2013increasedto37.7%from operating profitsduringtheperiod.Theeffectivetax caused byadecreaseinturnoverandhencethe for thesameperiodin2012.Suchdecreasewasmainly million forthefirsthalfof2013fromRMB63.4 Income taxexpensesdecreasedby14.2%toRMB54.4 Income tax dividends. denominated inforeigncurrenciesandpaymentof for settlementofadvertisingandpromotionexpenses 2013. Theseshort-termbankloanswereprimarilyused increase inshort-termbankloansduringthefirsthalfof The increaseinfinanceexpenseswascausedbyan Finance expenses in theGroup’sturnoverduringperiod. the reductionofwhichwereinlinewithdecrease decreased educationsurchargeandcityconstructiontax, staff quarters;(iii)writedownofinventories;and(iv) depreciation chargesforusingnewofficebuildingsand research anddevelopmentexpenses;(ii)increased Analysis Discussion and Management (continued) TTony Parker o n y

P a r k e r to 45daysfrom 48daysfortheyearended 31 December2012. The averagetradepayablesand billspayableturnoverdaysforthesixmonthsended30June 2013decreasedslightly 127 daysfortheyearended31 December2012. trade receivablesandbillsreceivable turnoverdaysincreasedto151forthesixmonths ended30June2013from first halfof2013,theGroupallowed someofthemtohavemoretimesettletheirdebts. Asaresult,theaverage As ourdistributorshavebeenexperiencingarationalization of thesportswearindustryandsluggishdemandduring economic conditionsduringthefirsthalfof2013. the yearended31December2012mainlybecauseofweak demandofsportsproductscausedbysluggish The averageinventoryturnoverdaysforthesixmonthsended 30June2013increasedto85daysfrom80for Working capitalratios loans. the followingitemstoturnover:(a)salariesandwagesofadministrative staff;and(b)bankchargesforarranging charges uponusingnewofficebuildingsandstaffquarters,writedownofinventories,anincreaseintheratios research anddevelopmentexpensestofurtherenhanceproductdesignsperformance,increaseddepreciation profit margin;and(ii)anincreaseintheratioofadministrativeexpensestoturnovermainlycausedbyincreased 17 Peak Sport Products Co., Limited 18 Interim Report 2013 currencies andpaymentofdividendstheCompany. within twoyearsandprimarilyusedforsettlementofadvertisingpromotionexpensesdenominatedinforeign The Groupborrowedbankloansduringthesixmonthsended30June2013.Allthesewererepayable The increaseintheGroup’scashandbankdepositsisanalyzedbelow: December 2012. RMB3,003.0 million,representinganetincreaseofRMB240.4millionwhencomparedtothepositionasat31 (including cashatbankandonhand,fixeddepositsheldpledgedbank)amountedto 2013 whencomparedtothoseasat31December2012.As30June2013,ourGroup’scashandbankdeposits activities wasmainlyduetodecreasesinthebalancesofinventories,tradereceivablesandbillsreceivableasat30June RMB224.7 million(Firsthalfof2012:outflowRMB113.4million).Theincreaseinthenetcashinflowfromoperating The netcashinflowfromoperatingactivitiesoftheGroupforsixmonthsended30June2013amountedto Liquidity andcapitalresources Analysis Discussion and Management Net increaseincashandbankdeposits Other netcashinflow Net proceedsfrombankloans Dividends paid Net capitalexpenditure Net cashinflowfromoperatingactivities CCycling Race IInternational QQinghai Lake tthe 2013Tour of PPeak sponsored n h e y i t e n a c e l g k r i 2 n

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30 June2013 Six months RMB’000 224,697 240,388 135,486 (83,926) (50,165) 14,296 ended The followingassetswerepledgedtobanksassecurityfor bills payableandcertainbankingfacilities: Pledge ofassets exchange exposureandadoptprudentmeasuresasappropriate. means tohedgeourforeignexchangeexposure.Nevertheless, themanagementwillcontinuetomonitorforeign trade receivables)willdeclineaccordingly.TheGrouphasnot usedanyforwardcontracts,currencyborrowingsorother dollars. IfRenminbiappreciatesagainstaforeigncurrency,the valueoftheforeigncurrencydenominatedassets(e.g. predominantly inUnitedStatesdollarsandbankloanswhichweredenominatedHongKongor foreign exchangeexposuremainlyarosefromourrevenuederivedexportsalesthatweredenominated settled inRenminbi,andthereforetheoverallforeigncurrencyriskwasnotconsideredtobesignificant.TheGroup’s The Group’soperatingactivitieswereprincipallycarriedoutinChinawithmostofourtransactionsdenominatedand Foreign exchangerisk Neither theCompanynoritssubsidiariesaresubjecttoexternallyimposedcapitalrequirements. new sharesorcontrolthegrowthofdebts. the longrun.Toachievethisend,Groupmayadjustamountofdividendstobepaidshareholders,issue Group hadcashinexcessofinterest-bearingloans.Itisthemanagement’sintentiontorestrictratiobelow50% Group definesnetdebtasinterest-bearingloanslesscashandcapitalthetotalequity.Asat30June2013, The Groupmonitorsitscapitalstructureonthebasisofanadjustednetdebt-to-capitalratio.Forthispurpose conditions. afforded byasoundcapitalposition,andmakesadjustmentstothestructureinlightofchangeseconomic Buildings Lease prepayments Bank deposits higher shareholderreturnsthatmightbepossiblewithlevelsofborrowingsandtheadvantagessecurity The Groupactivelyandregularlyreviewsmanagesitscapitalstructuretomaintainabalancebetweenthe operations andfuturedevelopments. position withsufficientstandbybankingfacilitiestocopefundingneedsarisingfromdaily The Grouphasbeenadoptingaprudenttreasurymanagementpolicyandstrongliquidity Carrying amount as at RMB’000 30 June 261,751 106,841 10,193 2013 31 December RMB’000 300,766 110,051 10,307 2012 19 Peak Sport Products Co., Limited 20 Interim Report 2013 oe Pleaserefertopage10fordetailsofclassificationgeographicalregions. Note: Analysis ofauthorizedPeakretailoutletsinChinabygeographicalregion: a netdecreaseof289outlets. 30 June2013,thetotalnumberofauthorizedPeakretailoutletswas6,194(31December2012:6,483),representing by closingdownsmallandlessefficientretailoutletswhileopeninglargerinthefirsthalfof2013.Asat for ourfuturegrowthandfurtherenhancebrandimage,theGroupcontinuedtooptimizedistributionnetwork by retailoutletoperators,hasbeenprovidinganeffectivechannelforourproductsthroughoutChina.Toprepare The networkofauthorizedPeakretailoutlets,whichcomponentsareownedandoperatedeitherbyourdistributorsor Distribution network Operations Review Analysis Discussion and Management Northern region Total Southern region Eastern region UUniversiade inKazan aat the27th Summer PPeak sponsored theUSTeam t e n

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S r i n e u (continued)

d m K

m t a h z e e a r n

U S

T e a m

30 June 1,855 6,194 2,192 2,147 Number ofretailoutletsasat 2013 31 December ,0 (2.6) 1,904 ,8 (4.5) (2.5) (7.9) 6,483 2,249 2,330 2012 change (%) 21

Analysis of authorized Peak retail outlets in China by type of city:

Number of retail outlets as at 30 June 31 December Change 2013 2012 (%) Peak Sport Products Co., Limited Sport Products Co., Peak

First-tier city 300 342 (12.3) Second-tier city 807 1,126 (28.3) Third-tier city 5,087 5,015 1.4

Total 6,194 6,483 (4.5)

The second-tier and third-tier cities in China have been the Group’s focused markets in recent years because of their faster economic growth and less intense competition when compared to the first-tier cities. Accordingly, most of authorized Peak retail outlets are located in the second-tier and third-tier cities. During the first half of 2013, the Group has been optimizing our distribution channel by closing down less efficient retail outlets.

Analysis of authorized Peak retail outlets in China by store category: SShanehane BattierBattier Number of retail outlet as at 30 June 31 December Change 2013 2012 (%)

Flagship Store 20 21 (4.8) Basic Store 3,773 3,938 (4.2) Department Store or Shopping Mall Outlet 2,338 2,455 (4.8) Basketball Specialty Outlet 63 69 (8.7)

Total 6,194 6,483 (4.5)

The authorized Peak retail outlets are classified into the above 4 categories. Flagship stores are street-level stores situated in prime locations in major cities and each flagship store has a floor area of at least 200 square metres and a monthly turnover (at retail price) of not less than RMB500,000. Basic stores are also street-level stores but do not satisfy the above criteria for flagship stores. Basketball specialty outlets are either street-level stores or shopping mall outlets and offer mainly premium basketball sports products to basketball enthusiasts. Management Discussion and Analysis (continued)

Management of distributors and retail outlets Our strict policies in managing our distributors and the operations of the authorized Peak retail outlets are crucial to the success of our distribution network.

China market We organize and host four sales fairs a year to introduce our new product collections for each season. Our domestic distributors and retail outlet operators attend the sales fairs and place orders which are generally six months in advance of the delivery of the ordered products.

We select our distributors according to a range of factors such as retail experience in sports products, ability to expand and operate a network of retail outlets, and adequacy of financial resources. We enter into an agreement with each distributor, whereby we grant the distributor an exclusive right to distribute our products in a specified area for a specified period of time, which is generally one year. Our distribution agreement contains principal terms such as geographical exclusivity, sales and expansion targets, credit terms, discounts offered and rewards. Subject to our written approval, our distributors may appoint retail outlet operators. We do not enter into agreements with such retail outlet operators except for licensing our trademarks to them. Our distributors are responsible for supervising and managing the operations of the authorized Peak retail outlets according to our policies and guidelines regarding the layout of outlets, sales and expansion targets, pricing, customer and after-sale services, etc.

We invite representatives of our distributors and retail outlet operators to attend training sessions to familiarize themselves with Peak policies and procedures. The training sessions take the form of in-house training as well as external training conducted by experienced retail management consultants.

On-site inspections of authorized Peak retail outlets are regularly carried out by our marketing teams to identify and inform distributors of any non-performing or non-compliant retail outlets. We coordinate with distributors to monitor the performance of these retail outlets and any recurring non-performance or non-compliance may cause a distributor to lose its distributorship.

The performance of each distributor is reviewed annually prior to the renewal of its distribution agreement. Key elements that form part of such review include whether the distributor has achieved the sales and expansion targets and complied with the credit terms.

22 Interim Report 2013 Peak brandsinceourinceptionin1991althoughweofferproducts in focusing onthebasketballsportscategoryinmarketingandpromoting consumers, theGrouphasbeenemployingafocusedmarketingstrategyby sportswear industry.Tocreateasimpleandpowerfulbrandmessagetoour We believethatmarketingandpromotionofourbrandarecrucialtosuccessinthe Strategy Brand promotionandmarketing ChinaBrandsExhibitioninBudapest,Hungary. — ChinaCommoditiesFairinKazakhstan;and — ChinaImportandExportFairinGuangzhou,China; — MOSSHOESinMoscow,Russia; — EastChinaFairinShanghai,China; — InternationalTradeFairforSportsEquipmentsandFashioninMunich,Germany; — During thefirsthalfof2013,weparticipatedinfollowinginternationalexhibitionsandtradefairs: products toconsumers,retailers,sportsteamsorclubs. products fromourwebsiteoratinternationalexhibitionstradefairs;and(ii)overseasdistributorswhothensell We sellourPeakbrandedproductsoverseasonawholesalebasisto:(i)customerswholearnabout Overseas markets rewards) toourdistributorswhomeetorexceedannualsalestargets. operators foropeningretailoutletswithhighrentalsinprimelocations.Wealsoofferperformancebonuses(or of storeimageandlayout,weprovidecertainrenovationworktoretailoutletsrentalsubsidiesoutlet As anincentiveforourdistributorstoexpandthenetworkofauthorizedPeakretailoutletsandmaintainconsistency connected tothesystem.Asat30June2013,2,444retailoutletswereourMIS. information system(“MIS”),whichcollectedreal-timeoperationaldataandfeedbackfromauthorizedPeakretailoutlets During thefirsthalfof2013,Groupcontinuedtoexpandcoverageourcomputerizedmanagement TTony Parker o n y

P a r k e r 23 Peak Sport Products Co., Limited Management Discussion and Analysis (continued)

almost every sports category. The Group promotes Peak as an international and professional brand through association with internationally renowned tournament organizers and provision of products with premium functionality and performance. Our promotion partners are therefore not restricted to domestic partners and include sports associations, leagues, federations, events, and individual athletes throughout the world. The Group also employs various means of promotion such as national and local television commercials, outdoor media, online advertising, newspapers and magazines.

Leveraging our success in focusing on the basketball sports category, the Group has rolled out our new marketing strategy focusing on two other sports categories (i.e. running and tennis) in addition to basketball in recent years. The Group believes that the new strategy will further enhance our brand image and positioning and ensure sustained growth in popularity of the Peak brand.

Basketball promotion partners The utilization of basketball promotion partners such as federations, leagues, teams, events and individual athletes is an integral part of the Group’s brand promotion and marketing strategy to differentiate us from our peers. Such focused strategy also disseminates a clear profile to consumers. The Group has had an association with most of the top renowned basketball promotion partners around the world and this enables the Group to build up successfully the most international brand image in the basketball sector among our Chinese peers. By requiring our endorsed basketball athletes to wear our basketball footwear during all tournaments, we demonstrate that our products can withstand the severest tests of functionality 24 KKyleyle LowryLowry and performance and this further enhances our professional brand image. Although the Group has started promoting the other sports categories in addition to basketball under the new marketing strategy, we will continue to dedicate the most significant portion of our

Interim Report 2013 resources to the basketball sports category so as to maintain our leading position in the basketball sector in coming years. all officialsandstaffofthetournaments. 2005. Undertherelevantsponsorship agreement,theGroupisrequired,amongotherthings, tosupplysportswear highest rankinginternationalbasketballtournamentsinChina. TheGrouphasbeensponsoringtheStankovic national teamsofanumbercountries.Itisalsothemost well-knowninternationalbasketballgameandoneofthe The Stankovic Stankovic logos andmascotsassociatedwithcertainFIBAsportscompetitions onsomeofourproducts. referees andvolunteersatallFIBAZonesChampionships, andhasanexclusiverighttousegloballyspecified sponsorship andlicensingagreements,theGroupisrequired, amongotherthings,tosupplyfootwearallstaff, worldwide andtheexclusivesportswear(apparelheadwear) partnerofFIBAinAsiaAugust2011.Underrelevant The GrouphashadanassociationwithFIBAsince2008and becametheofficialandexclusivefootwearpartnerofFIBA FIBA out ofthe30NBAteamsasfollows(listedbyalphabeticalorder): As at30June2013,theGroupendorsedatotalof18NBAplayers.Withtheseplayers,wehadpresencein15teams teams. Raptors underwhichtheGroupcan,amongotherthings,displayPeaksignageathomestadiumsofthree The GroupalsoenteredintosponsorshipagreementswiththeNBA’sHoustonRockets,MiamiHeatandToronto promotion ofthePeakbrandandourproductsinChina. among otherthings,therighttouseNBAlogoandlicensedmarksinconnectionwithadvertising The GrouphasbeenanofficialmarketingpartnerofNBAinChinasince2007.associationwithincludes, NBA league,teamsandplayers oyPre SanAntonioSpurs MiamiHeat IndianaPacers MilwaukeeBucks TorontoRaptors SacramentoKings DenverNuggets Philadelphia76ers IndianaPacers UtahJazz Philadelphia76ers BrooklynNets GoldenStateWarriors MinnesotaTimberwolves OrlandoMagic Tony Parker Shane Battier DallasMavericks Samuel Dalembert OrlandoMagic Sam Young Patrick Patterson NBAteams LosAngelesLakers Kyle Lowry JaVale McGee Jason Richardson Gordon Hayward George Hill Dorell Wright C.J. Watson Chase Budinger Carl Landry Beno Udrih Anthony Morrow Andrew Nicholson Andrew Goudelock NBA players ’ ContinentalChampions’Cup ’ ContinentalChampions’Cup(“Stankovic ’ Cup”)isaninternationalbasketballtournamentformen’s ’ Cupsince 25 Peak Sport Products Co., Limited 26 Interim Report 2013 throughout the tour. players gainedintensemediaexposure and Xiamen.BoththePeakbrand andNBA cities, includingBeijing,Guangzhou, Chengdu with Chinesebasketballfansin morethan10 in thetour.Thesespokespersonsinteracted several ofourNBAspokespersonstoparticipate Beijing on2July2013.TheGroupinvited The 2013PeakTeamChinaTourkicked-offin increase thepopularityofbasketballinChina. with anaimtopromotetheNBAspiritand activities. ThetourisheldonceayearinChina most importanteventsamongallourmarketing The “PeakTeamChinaTour”isoneofthe Peak TeamChinaTour all officialsandstaffofthetournament. among otherthings,suppliedsportsapparelto apparel supplierofthetournament,Group, 2013. Beingasponsorandofficialsports 2013 ABAChampionshipwasheldinAugust 2013 ABAChampionship LebaneseBasketballFederation. — IcelandicBasketballFederation;and — GermanBasketballFederation; — Coted’IvoireBasketballFederation; — CameroonBasketballFederation; — BasketballNewZealand; — BasketballFederationofSerbia; — BasketballFederationofMontenegro; — — Basketball Australia; follows: these nationalbasketballfederationswereas and matches.Duringthefirsthalfof2013, teams withsportsproductsinspecifiedgames among otherthings,tosupplyrelevantnational sponsorship agreements,theGroupisrequired, their owncountries.Undertherelevant responsible formanagingthenationalteamsof national basketballfederationswhichare The Grouphasassociationwithanumberof National BasketballFederations Analysis Discussion and Management (continued) George Hill Tony Parker Kyle Lowry organize interactivegamesandtennis-relatedactivitiesfortennis fansinGuangzhouandBeijingSeptember2013. products intheAsiaPacificregion.Inaddition,Groupis theofficialpartnerofWTATourFestivalandwill The Group,amongotherthings,obtainsalicencetodevelop, manufacture,marketandselltheWTA-PEAKco-branded BMWMalaysianOpen(KualaLumpur, Malaysia). — GuangzhouInternationalWomen’s Open(Guangzhou,China);and — PTTPattayaWomen’sOpen(Pattaya, Thailand); — MoorillaHobartInternational(Hobart, Australia); — ApiaInternationalSydney(Sydney,Australia); — BrisbaneInternational(Brisbane,Australia); — ASBClassic(Auckland,NewZealand); — partner forthefollowingtournaments,whichmakeupWTATourduring2013: circuit ofwomen’sprofessionaltennis.Pursuanttotheagreement,Groupisofficialfootwearandapparel The Groupenteredintoaproductsponsorshipandpromotionagreementin2010withWTA,whichistheworldwide Women’s TennisAssociation(“WTA”)Tour professionalism ofthePeakbrandtopromoteourtennissportsproducts. sports products.Accordingly,theGrouputilizespromotionpartnerswhichcanmanifestinternationalismand adopted thesamemarketingstrategyofbuildingupaninternationalandprofessionalbrandimageforourtennis been strengtheningourpromotioninthetennissector.Leveragingsuccessbasketballsector,Grouphas With aviewtoattractingmorefemalecustomersandboostingthesportswearsales,Grouphasgradually Tennis promotionpartners The14thXiamen-PeakBasketballCamp( — The18thQuanzhou100Teams/1000MatchesBasketballCompetition( — The Groupalsosponsoredthefollowingbasketballeventsinfirsthalfof2013: Other basketballsponsorships promote bothNBAandthePeakbrand. Nation, theGroupsuppliedallsportsproductsforeventandprovidedagreatopportunitytofurther including Beijing,ShanghaiandGuangzhouduringJune–August2013.AstheofficialmarketingpartnerofNBA This wasthesecondyearthateventheldinChinaandtookplaceacrossmorethan10cities elements ofentertainment,providesanexcellentplatformtodeliverthebestNBAexperiencebasketballfans. NBA NationisaninteractivebasketballeventofficiallylaunchedbyNBA.Theevent,whichinvolvesaswell NBA Nation April toAugust;and 匹克廈門籃球夏令營 ) heldfromJulytoAugust. 泉州百隊千場籃球賽「匹克杯」 ) heldfrom 27 Peak Sport Products Co., Limited 28 Interim Report 2013 The NationalOlympicCommitteeofJordan — The NationalOlympicCommitteeofLebanon — TheNationalOlympicCommittee ofSlovenia — TheNationalOlympicCommittee ofNewZealand — the GroupsponsoredfollowingnationalOlympiccommittees: the Groupiscommittedtoprovidesportsproductsincertain sportsgamestothenationalteams.Asat30June2013, The Groupenteredintosponsorshipagreementswithanumber ofnationalOlympiccommittees.Undertheagreements, National OlympicCommittees Other promotionpartnersandevents effectively promoteourrunningfootwear. online userstobuysportsproductsatourretailoutletsbyofferinggamesandprizesthem.Asaresult,we magazines. TheGroupalsolaunchesaninteractiveonlineplatformspecificallyforourrunningfootwear.Weattractthe The promotionpartnersofourrunningfootwearincludeCCTV,GuangdongSportsTVandanumbersports In linewithournewmarketingstrategy,theGroupconsistentlystrengthenspromotionofrunningfootwear. Running promotionpartners endorsement contractswiththefollowinginternationaltennisplayersasat30June2013(listedbyalphabeticalorder): To increaseourbrandawarenessandfurtherenhancetheinfluenceofPeakinwomen’stennissector,Grouphad Endorsed tennisathletes Analysis Discussion and Management uXaChina China Serbia Belarus Russia Yu Xia Wang Boyan Vesna Dolonc Olga Govortsova Nina Bratchikova i iriChina Russia Georgia USA Hungary Poland China Slovenia Ukraine China Kazakhstan Belarus Colombia Mervana Jugi Maria Kondratieva Russia Maria Abramovi Country Margalita Chakhnashvili Liu Xinrui Klaudia Jans-Ignacik Katarina Srebotnik Katalin Marosi Julia Cohen Irina Buryachok He Sirui Galina Voskoboeva Ekaterina Dzehalevich Chen Yao Catalina Castaño Andreja Klepa Ana Savi Alla Kudryavtseva Tennis players ć ć č -Salki ć ć (continued) Bosnia andHerzegovina Croatia Slovenia Croatia omneetdt fpouto u 94Jl21 u 08Fb20 e 08Jan2012 Sep2008 Feb2004 Jun2008 Jul2011 Aug1994 Estimated annualproductioncapacity Commencement dateofproduction Location (pairs/pieces) (Note) oe Estimatedannualproduction capacityisanestimatewemakeeach yeartakingintoaccountanumberoffactorsand assumpt Note: Analysis ofproductioncapacitybylocationandproductcategory: contract manufacturers. approximately 35.8%wereproducedin-houseand64.2%throughoutsourcingto The totalapparelproductionvolumeforthefirsthalfof2013wasapproximately12.0millionpieces,which Shang’gao inJiangxiProvince.Wealsooutsourceamajorportionofourapparelproductiontocontractmanufacturers. The GroupcurrentlyhasthreeapparelproductionfacilitiesatFengzeinFujianProvince,Hui’anProvinceand Apparel productionfacilities 67.9% wereproducedin-houseandapproximately32.1%throughoutsourcingtocontractmanufacturers. total footwearproductionvolumeforthefirsthalfof2013wasapproximately5.6millionpairs,which Shang’gao inJiangxiProvince.Wealsooutsourceaportionofourfootwearproductiontocontractmanufacturers.The The GroupcurrentlyhasthreefootwearproductionfacilitiesatFengzeinFujianProvince,Hui’anProvinceand Footwear productionfacilities changes, andbetterbargainingpowerovercontractmanufacturers. including bettercontrolovertheproductionprocess,havingflexibilityandabilitytorespondpromptlymarket with contractmanufacturers.Webelievethatmaintainingourownproductioncapabilitieshasseveraladvantages Our productsaremanufacturedeitherbytheGroup’sownproductionfacilitiesorthroughoutsourcingarrangements Production capacity USIUSF withsportsapparelsinthe27thSummerUniversiadewhichwasheldKazan,RussiaJuly2013. The GrouppartneredwithUSIUSF.Undertherelevantsponsorshipagreement,wasresponsibleforsupplying The UnitedStatesInternationalUniversitySportsFederation(“USIUSF”) years since2006. collaborative partnerandthesolesupplierofsportsproductstoofficialscompetitionforeightconsecutive year inQinghaiLakewithtopcyclistsfromfivecontinentsoftheworldparticipating.TheGrouphasbecome level, whichisrecognizedbytheInternationalCyclingAssociation.ThecompetitionheldfromJulytoAugustevery QLCR isatop-tierinternationalhighwaycyclingcompetitionheldatracingtrackwiththehighestaltitudeabovesea 2013 TourofQinghaiLakeInternationalCyclingRace(“QLCR”) xetdtm ffl rdcinNANA21 / 052014 2015 N/A 2015 N/A 0.4million N/A 7.5 million 2.3million 5.0million 1.5million 2.3million 2012(Jan-Dec) Expected productioncapacityuponfull Expected timeoffullproduction Actual productionvolume(pairs/pieces) rdcin(ar/ics / / 20mlinNA1. ilo 0.8million 16.4million N/A 12.0million N/A N/A production (pairs/pieces) produce inanyyearwould havebeenhigherorlowerthanthe actualamountweproduceforthatyear. seasonal impactonproduction. Asthesefactorsandassumptions mayvaryovertime,therecanbenoassurance thattotalamount of productionlines,amount ofequipmentandpersonnel,rate productionperworkerhour,number ofhoursanddaysourwo 0230mlin20mlin60mlin30mlin1. ilo 0.4million 10.5million 3.0million 6.0million 2.0million 3.0million 2012 0323mlin17mlin50mlin23mlin75mlin0.3million 0.1million 7.5million 3.2million 2.3million 1.0 million 5.0million 2.0million 1.7million 0.8million 2.3million 1million 2013 (Jan-Jun) 2013 province (full production) Quanzhou Fengze Fujian oterpouto aiiisApparelproductionfacilities Footwear productionfacilities province (full production) Quanzhou Hui’an Fujian Shang’gao province Jiangxi Yichun province (full ions, including,amongothers,number production) Quanzhou Fengze s wewouldhavebeen ableto Fujian rkers workpermonth, and Quanzhou province Hui’an Fujian 29 Shang’gao

province Peak Sport Products Co., Limited Jiangxi Yichun 30 Interim Report 2013 finished goodsforus.TheOEMarrangementsallowustodevotelessofourmanagementtimeonmonitoringthe to procurerawmaterialsfortheirproduction.OEMsareresponsiblealltheproductionprocessesandproduce arrangements, weprovideOEMswiththedesignsandspecificationsofourproductsrecommendsupplierstothem raw materialsandpaythemprocessingfeesforcompletingcertainproductionprocessesus.UndertheOEM with originalequipmentmanufacturers(“OEM”).Underthesubcontractarrangements,weprovidesubcontractors types ofoutsourcearrangementswithourcontractmanufacturers:(i)subcontractarrangements;and(ii) A significantportionoftheGroup’sfootwearandapparelwasoutsourcedtocontractmanufacturers.Wehavetwo Supply chainmanagement friendly orrecycledmaterialsandtoadoptenergy-savingprocessesmanufactureitsproducts. when selectingrawmaterialsanddesigningnewproducts.TheGroupwillcontinuetointroducemoreenvironmentally In additiontoproductfunctionalityandstyle,theR&Dworkshopstakeaccountofenvironmentalprotectionissues footwear products,515newapparelproductsand101accessorytoconsumers. needs ofdifferentconsumersegmentsallovertheworld.Duringfirsthalf2013,Groupintroduced215new design teamsindifferentworkshops,wearecapableofdesigningmoreinnovativeandstylishproductstosatisfythe workshops altogetheremployedapproximately220researchanddesignprofessionals.Throughtheinteractionsof 2013, theGroupoperatedfourR&DworkshopslocatedinBeijing,Guangzhou,QuanzhouandLosAngeles.These and functionalitytoourcustomers.Tothisend,theGroupcontinuesinvestinR&Dofnewproducts.Asat30June Being aprofessionalsportswearmanufacturer,weendeavourtointroducehighqualityproductswithinnovativedesigns Research &development(“R&D”) Analysis Discussion and Management (continued) SShane Battier h a n e

B a t t i e r demonstrated exceptionalperformance. Group. Asanadditionalincentive toouremployees,theCompanygrantsshareoptions thoseemployeesthathave experience. Wegenerallydistribute bonusestoouremployeesateachyearendreward theircontributiontothe We determinetheremunerationofouremployeesbasedon factorssuchasqualifications,performanceandyearsof marketing andknowledgeofcurrentofferingstosupportour front-lineoperations. managers andothertrainingcoursesontopicssuchasregional trainingpolicyset-up,standarddisplayproject product knowledgeandsellingpromotionskills.During the firsthalfof2013,weheld8trainingcampsforstore We providesystematictrainingtoourfront-linesalesstaff, distributors andretailoutletoperatorsregardingPeak’s professional roles,etc. We launchedpre-jobtrainingprogrammesfornewstaffand othertrainingprogrammesrelatedtomanagementskills, technical andproductknowledgeaswellofindustry qualitystandardsandworkplacesafetystandards. We careforthecareerdevelopmentofourstaffandprovidevariouskindstrainingcoursestoenhancetheir 8,200. to recruiting,trainingandrewardingourstaff.Asat30June2013,theGroup’stotalheadcountwasapproximately We considerourpeopletobethemostvaluableassetGroupandwillcontinueallocatesufficientresources Human resources Weorganizefoursalesfairseachyeartoallowourdistributorsandretailoutletoperators reviewournew • Wedonotenterintoanylong-termagreementswithofoursuppliers.Thisgivesusflexibility toswitch • Guangdong WesourceourrawmaterialsfromsupplierslocatedinnearbyregionssuchasFujianProvince, • supply ofrawmaterialsandfinishedgoods: In additiontotheaboveprocedures,Groupalsoadoptsfollowingmeasuresensureanefficientandeffective late delivery. a timelymannertorelevantcontractmanufacturersanyfailuremeetourproductqualityrequirementsorincidentsof and performanceofourcontractmanufacturersbycheckingeachbatchproductsdeliveredtoussoasreportin an annualevaluationandassessmentofproductqualitytimelinessdelivery.Wemonitortheoperation The Groupcarefullyselectsandevaluatesourcontractmanufacturers.Eachofmanufacturersissubjectto production processes. and enhancingourbrandimagewhilethesubcontractarrangementsenableustoobtainmorecontrolover whole productionprocessessoastodivertourresourcesotherareassuchmonitoringPeak’sdistributionnetwork to themarket. products. Withthispractice,productioncanbebetterplannedinadvancetoensuresmoothsupplyofproducts product collectionsandplacepre-seasonordersgenerallysixmonthsinadvanceofthedeliveryordered production needs. other suppliersforlowerrawmaterialcostswithbetterqualityanddeliveryschedulesthatbestsuitour procurement costs. Province andJiangxiProvince.Theproximityofthesesupplierstoourproductionfacilitieshelpsreduce 31 Peak Sport Products Co., Limited 32 Interim Report 2013 Shangdong Projectwilltakeatleastfivemoreyearsforits completion. unfavourable economicconditions,theGrouphasdelayed constructionofthenewplant.Weestimatethat million piecesofapparelwithtotalcapitalexpenditureamounting toaboutRMB1billion.Becauseoftherecent Shandong Province(“ShandongProject”).Theestimatedannual productioncapacityofthenewplantisabout30 labour costaroundthecoastalregionsofChina,Group is goingtobuildanotherapparelplantatHezein new machineryandequipmentforourproductionfacilitiesinthesecondhalfof2013.Toalleviateimpactrising promptly tomarketchanges.Accordingly,theGroupwillinvestapproximatelyRMB60millionconstructandpurchase production process,betterbargainingpowerovercontractmanufacturers,andtheflexibilityabilitytorespond As mentionedabove,maintainingourownproductioncapabilitieswillenableustohavebettercontrolof Expansion ofproductioncapacity and responsivenesstomarketchanges. Group willalsoencourageourdistributorstoopenmoreoftheirownretailoutletsfurtherenhanceefficiency distributor hasbeenreduced,suchcanconcentrateitsresourcestobettermanagethesmallerregion.The managed byanunderperformingdistributortothenewdistributor.Whenarea to enhancetheircompetitiveness.TheGroupmayintroduceanewdistributorbyallocatingpartofregionpreviously withstand changesinmarketconditions.Regardingourdistributors,theGroupwillcontinuetoincreasetheirnumber the Groupwillencourageeachretailoutletoperatortoopenmoreoutletssoasincreaseitscapability operators, morelargerretailoutletsandtoclosedownsmalllessefficientin2013.Atthesametime, channels. Regardingourretailnetwork,theGroupwillcontinuetoopen,throughdistributorsandoutlet To prepareforthefuturedevelopmentofsportswearindustry,Groupwillcontinuetooptimizeourdistribution Optimization ofdistributionchannels extend ourbrandreachthroughouttheworld. organizers suchasNBAandFIBAotherpromotionpartnersincludingteams,eventsindividualathletesto sports categoriessuchasrunningandtennis.Incomingyears,theGroupwillcontinuetoutilizerenownedtournament leading positioninthebasketballsectorChina,wewillalsoincreasemarketingandpromotionactivitiesforother resources tobrandbuildingandmaintenance.Whilewestillfocusonthebasketballsportscategorymaintainour crucial toourdevelopmentandsuccessinfuture.Accordingly,wewillcontinueallocateasignificantportionof The Groupstrivestoenhanceourinternationalandprofessionalimageasweacknowledgebrandbe Enhancement ofthePeakbrand business, theGroupwilluseourbestendeavourstoaccomplishfollowingtasksincomingyears. We areoptimisticaboutthefuturedevelopmentofsportswearindustry.Toensuresustainedgrowthour Prospects Analysis Discussion and Management (continued) 13 August2013 Central, HongKong 10 ChaterRoad 8th Floor,Prince’sBuilding Certified PublicAccountants KPMG “ at 30June2013isnotprepared,inallmaterialrespects, accordancewithInternationalAccountingStandard34, Based onourreview,nothinghascometoattentionthat causesustobelievethattheinterimfinancialreportas Conclusion be identifiedinanaudit.Accordinglywedonotexpressauditopinion. consequently doesnotenableustoobtainassurancethatwewouldbecomeawareofallsignificantmattersmight substantially lessinscopethananauditconductedaccordancewithHongKongStandardsonAuditingand responsible forfinancialandaccountingmatters,applyinganalyticalotherreviewprocedures.Ais Certified PublicAccountants.Areviewoftheinterimfinancialreportconsistsmakingenquiries,primarilypersons financial informationperformedbytheindependentauditorofentity We conductedourreviewinaccordancewithHongKongStandardonReviewEngagements2410,“ Scope ofreview We donotassumeresponsibilitytowardsoracceptliabilitytoanyotherpersonforthecontentsofthisreport. conclusion solelytoyou,asabody,inaccordancewithouragreedtermsofengagement,andfornootherpurpose. Our responsibilityistoformaconclusion,basedonourreview,theinterimfinancialreportand and presentationoftheinterimfinancialreportinaccordancewithInternationalAccountingStandard34. Reporting to beincompliancewiththerelevantprovisionsthereofandInternationalAccountingStandard34,“ Listing ofSecuritiesonTheStockExchangeHongKongLimitedrequirethepreparationaninterimfinancialreport consolidated cashflowstatementforthesix-monthperiodthenendedandexplanatorynotes.TheRulesGoverning consolidated statementofcomprehensiveincome,thechangesinequity,andcondensed of financialpositionPeakSportProductsCo.,Limited(the“Company”)as30June2013,andtherelated We havereviewedtheinterimfinancialreportsetoutonpages34to52whichcomprisesconsolidatedstatement Introduction Financial Report on theInterim Review Report (Incorporated intheCaymanIslandswithlimitedliability) Peak SportProductsCo.,Limited Review reporttotheBoardofDirectors Interim FinancialReporting ”, issuedbytheInternationalAccountingStandardsBoard.TheDirectorsareresponsibleforpreparation ”. ”, issuedbytheHongKongInstituteof Review ofinterim Interim Financial 33 Peak Sport Products Co., Limited Interim Financial Report Consolidated statement of comprehensive income For the six months ended 30 June 2013 — unaudited (Expressed in Renminbi)

Six months ended 30 June

Note 2013 2012 RMB’000 RMB’000

Turnover 4 1,172,900 1,612,904 Cost of sales (774,109) (1,004,323)

Gross profit 398,791 608,581 Other revenue 5 28,379 15,448 Other net income 5 2,708 5,702 Selling and distribution expenses (158,397) (226,590) Administrative expenses (120,968) (97,692)

Profit from operations 150,513 305,449 Finance expenses 6(a) (6,226) (2,369)

Profit before income tax 6 144,287 303,080 Income tax 7 (54,383) (63,429)

Profit for the period attributable to equity shareholders of the Company 89,904 239,651 Other comprehensive income for the period: Exchange differences on translation of financial statements of foreign operations 4,970 (2,926)

Total comprehensive income for the period attributable to equity shareholders of the Company 94,874 236,725

34 Earnings per share (RMB cents) — Basic 9 4.29 11.42

— Diluted 9 4.29 11.42

The notes on pages 38 to 52 form part of this interim financial report. Details of dividends declared after the period Interim Report 2013 end and paid during the period to equity shareholders of the Company are set out in note 8.

– 34 – (Expressed inRenminbi) At 30June2013—unaudited of financialposition Consolidated statement The notesonpages 38to52formpartofthis interimfinancialreport. Approved andauthorizedforissue bytheBoardofDirectorson13August2013. eerdtxast 22(b) 12 13 Deferred taxassets Deposits andprepaymentsforpurchaseofnon-currentassets Lease prepayments eevs24 Reserves 22(a) Net assets Current taxliabilities rd n te aals20 26(c) 15 18 Net currentassets 16 14 Amount duetoarelatedparty Trade andotherpayables 11 Cash andcashequivalents Deposits withbanksmorethanthreemonthsto Trade andotherreceivables Inventories Current assets Intangible assets Construction inprogress eerdtxlaiiis22(b) Deferred taxliabilities lde eois17 Pledged deposits hr aia 23 19 Total equity 19 Share capital Equity Bank loan Non-current liabilities Total assetslesscurrentliabilities Bank loans Current liabilities rpry ln n qimn 10 Property, plantandequipment Non-current assets maturity whenplaced uJnnnXuZhihua Xu Jingnan ietrDirector Director Note 1,020,911 4,094,308 4,075,848 4,094,308 4,287,521 3,476,168 4,364,160 2,211,293 RMB’000 30 June 261,751 340,205 811,353 113,307 125,303 476,842 193,213 119,867 887,992 343,043 511,843 530,000 18,230 21,542 56,129 18,460 73,346 33,106 2013 — 31 December 1,092,894 4,083,084 4,064,624 4,083,084 4,149,746 3,343,090 4,241,907 2,236,890 RMB’000 300,766 386,357 806,656 111,961 494,623 898,817 372,673 496,224 225,000 37,714 20,316 93,991 48,051 18,460 66,662 66,662 28,663 1,257 2012 — 35 Peak Sport Products Co., Limited Consolidated statement of changes in equity For the six months ended 30 June 2013 — unaudited (Expressed in Renminbi)

Share-based Share Share Statutory Other Exchange payment Retained capital premium reserve reserve reserve reserve profits Total equity RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Note 23) (Note 24(a)) (Note 24(b)) (Note 24(c)) (Note 24(d)) (Note 24(e))

At 1 January 2012 18,460 1,020,472 279,957 81,354 2,239 13,005 2,628,059 4,043,546 Equity-settled share-based payment —————1,024 — 1,024 Transfer between reserves in respect of share options forfeited after vesting date —————(420) 420 — Dividends — (186,436) —————(186,436) Total comprehensive income for the period ————(2,926) — 239,651 236,725

At 30 June 2012 18,460 834,036 279,957 81,354 (687) 13,609 2,868,130 4,094,859

At 1 January 2013 18,460 748,271 320,189 81,354 1,482 14,372 2,898,956 4,083,084 Equity-settled share-based payment —————276—276 Transfer between reserves in respect of share options forfeited after vesting date —————(1,079)1,079— Dividends —(83,926)—————(83,926) Total comprehensive income for the period ————4,970—89,90494,874

At 30 June 2013 18,460 664,345 320,189 81,354 6,452 13,569 2,989,939 4,094,308

The notes on pages 38 to 52 form part of this interim financial report.

36 Interim Report 2013

– 36 – The notesonpages38to52formpartofthisinterimfinancialreport. (Expressed inRenminbi) For thesixmonthsended30June2013—unaudited cash flowstatement Condensed consolidated Cash andcashequivalentsat1January Net cashgeneratedfromfinancingactivities Net cashusedininvestingactivities Effect offoreignexchangeratechanges Cash generatedfrom/(usedin)operations Cash andcashequivalentsat30June Net decreaseincashandequivalents Net cashgeneratedfrom/(usedin)operatingactivities Income taxpaid Note 18 18 Six monthsended30June 2,211,293 2,236,890 RMB’000 (295,567) 224,697 248,469 (26,792) (23,772) 44,078 1,195 2013 2,349,463 2,503,009 RMB’000 (148,900) (162,859) (113,376) 127,335 (77,174) (36,202) (4,646) 2012 37 Peak Sport Products Co., Limited Notes to the unaudited interim financial report

(Expressed in Renminbi unless otherwise indicated)

1 Basis of preparation This interim financial report has been prepared in accordance with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, including compliance with International Accounting Standard (“IAS”) 34, “Interim Financial Reporting”, issued by the International Accounting Standard Board (“IASB”). This interim financial report was authorized for issue on 13 August 2013.

The interim financial report has been prepared in accordance with the same accounting policies adopted in the 2012 annual financial statements, except for the accounting policy changes that are expected to be reflected in the 2013 annual financial statements. Details of these changes in accounting policies are set out in note 2.

The preparation of an interim financial report in conformity with IAS 34 requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses on a year-to-date basis. Actual results may differ from these estimates.

This interim financial report contains condensed consolidated financial statements and selected explanatory notes. The notes include an explanation of events and transactions that are significant to an understanding of the changes in financial position and performance of Peak Sport Products Co., Limited (the “Company”) and its subsidiaries (collectively refer to as the “Group”) since the 2012 annual financial statements. The condensed consolidated interim financial statements and notes do not include all of the information required for a full set of financial statements prepared in accordance with International Financial Reporting Standards.

The interim financial report is unaudited, but has been reviewed by KPMG in accordance with Hong Kong Standard on Review Engagements 2410, “Review of interim financial information performed by the independent auditor of the entity”, issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). KPMG’s independent review report to the Board of Directors is included on page 33.

The financial information relating to the year ended 31 December 2012 that is included in the interim financial report as being previously reported information does not constitute the Company’s statutory financial statements for that financial year but is derived from those financial statements. Statutory financial statements for the year ended 31 December 2012 are available from the Company’s registered office. The Company’s auditor has expressed an unqualified opinion on those financial statements in its report dated 11 March 2013.

2 Changes in accounting policies The IASB has issued a number of new IFRSs and amendments to IFRSs that are first effective for the current accounting period of the Group. Of these, the following new standards and amendments to IFRSs are relevant to the Group’s current financial statements.

38 • IFRS 10, Consolidated financial statements

• IFRS 13, Fair value measurement

• Revised IAS 19, Employee benefits

Interim Report 2013 • Amendments to IFRS 7, Financial instruments: Disclosures - offsetting financial assets and financial liabilities

These new standards and amendments to IFRSs have no material impact on the Group’s consolidated financial statements as they were consistent with policies already adopted by the Group. The Group has not adopted any new standard or amendment to IFRSs that is not yet effective for current accounting period.

– 38 – 4 Turnover 3 Segment reporting The Group’srevenuebygeographicallocationisdetermined bythedestinationtowhichgoodsaredelivered. 30 June2013(sixmonthsended2012:RMB243,237,000). The revenuederivedfromthiscustomeramountedtoapproximatelyRMB175,835,000forthesixmonthsended The Grouphasonecustomerwithwhomtransactionshaveexceeded10%oftheGroup’saggregateturnover. added taxesandothersalestaxes,isanalyzedasfollows: apparel andaccessories.Turnoverrepresentsthesalesvalueofgoodssoldlessreturns,discounts,rebates, The principalactivitiesoftheGrouparemanufacturingandtradingsportsproducts,includingfootwear, manufacture andsaleofsportsproductsinthePRC. No segmentinformationispresentedfortheGroup’sbusinessasGroupprincipallyengagedin material maybeaggregatediftheyshareamajorityofthesecriteria. the services,andnatureofregulatoryenvironment.Operatingsegmentswhicharenotindividually of productionprocesses,thetypeorclasscustomers,methodsusedtodistributeproductsprovide have similareconomiccharacteristicsandareinrespectofthenatureproductsservices, Individually materialoperatingsegmentsarenotaggregatedforfinancialreportingpurposesunlessthe geographical locations. purposes ofallocatingresourcesto,andassessingtheperformanceof,Group’svariouslinesbusiness identified fromthefinancialinformationprovidedregularlytoGroup’smostseniormanagementfor Operating segmentsandtheamountsofeachsegmentitemreportedinconsolidatedfinancialstatementsare Accessories Apparel Overseas PRC Footwear Six monthsended30June Six monthsended30June 1,172,900 1,172,900 RMB’000 RMB’000 174,004 998,896 665,569 475,783 31,548 2013 2013 1,612,904 1,416,484 1,612,904 RMB’000 RMB’000 196,420 811,790 753,359 47,755 2012 2012 39 Peak Sport Products Co., Limited Notes to the unaudited interim financial report (continued)

(Expressed in Renminbi unless otherwise indicated)

5 Other revenue and net income

Six months ended 30 June 2013 2012 RMB’000 RMB’000

Other revenue Interest income 19,697 10,453 Government grants 8,616 4,946 Others 66 49

28,379 15,448

Other net income Exchange gain 2,164 2,002 Gain on sales of materials 544 3,678 Others — 22

2,708 5,702

Government grants were received from local authorities for the Group’s contributions to local communities and its achievement in export sales. The grants, which were unconditional, also included refunds of value added tax from local governments.

6 Profit before income tax Profit before income tax is arrived at after charging:

Six months ended 30 June 2013 2012 RMB’000 RMB’000

(a) Finance expenses: Interest on bank borrowings 6,226 2,369

(b) Staff costs: Contributions to defined contribution retirement plans 3,979 4,236 Equity-settled share-based payments (note 21) 276 1,024 40 Salaries, wages and other benefits 153,102 177,375

157,357 182,635

Interim Report 2013 Auditor’s remuneration 900 1,961 Depreciation 21,518 18,770 Operating lease charges in respect of properties 7,400 5,229 Cost of inventories# 774,109 1,004,323 Loss on disposal of property, plant and equipment 37 104

# Cost of inventories for the six months ended 30 June 2013 includes RMB109,223,000 (six months ended 30 June 2012: RMB135,203,000) relating to staff costs, depreciation and amortization expenses and operating lease charges, which amount is included in the respective total amounts disclosed separately above in notes 6(b) and (c) for each of these types of expenses. – 40 – Income taxintheconsolidatedstatementofcomprehensiveincome 7 withholding taxunderthedoublearrangementbetweenHongKongandmainlandofPRC. wholly ownedbyaHongKongincorporatedsubsidiary,rateof5%isapplicabletothecalculationthis sources withinthePRC.AsallGroup’ssubsidiariesinPRCareforeign-investedenterprisesdirectlyand rate of10%(unlessreducedbytreaty)onvarioustypespassiveincomesuchasdividendsderivedfrom connected withtheestablishmentorplaceofbusinessinPRC,willbesubjecttoawithholdingtaxat PRC orwhichhasanestablishmentplaceofbusinessinthebutwhoserelevantincomeisnoteffectively In addition,from1January2008,anon-residententerprisewithoutanestablishmentorplaceofbusinessinthe entitled totaxconcessions. Group. Duringtheperiod,none(sixmonthsended30June2012:two)ofPRCsubsidiariesGroupis based onthestatutoryrateof25%assessableprofitssubsidiariesinPRCcomprising Pursuant totheincometaxrulesandregulationsofPRC,provisionforPRCcorporateiscalculated to HongKongProfitsTaxforthesixmonthsended30June2013. No provisionhasbeenmadeforHongKongProfitsTaxastheGroupdidnotearnanyincomethatwassubject subject toanyincometaxintheCaymanIslandsorBVI. Pursuant totherulesandregulationsofCaymanIslandsBritishVirgin(“BVI”),Groupisnot Origination andreversaloftemporarydifferences Deferred tax Provision fortheperiod—PRCincometax Current tax Six monthsended30June RMB’000 54,383 26,168 28,215 2013 RMB’000 63,429 59,618 3,811 2012 41 Peak Sport Products Co., Limited Notes to the unaudited interim financial report (continued)

(Expressed in Renminbi unless otherwise indicated)

8 Dividends (a) Dividends attributable to equity shareholders of the Company in respect of the current period

Six months ended 30 June

2013 2012 RMB’000 RMB’000

Interim dividend declared after the interim period of HK2 cents per ordinary share (2012: HK5 cents) 33,424 85,643 Special interim dividend declared after the interim period of HK6 cents per ordinary share (2012: nil) 100,271 —

133,695 85,643

The interim dividend and special interim dividend have not been recognized as a liability as at 30 June 2013.

(b) Dividends attributable to equity shareholders of the Company in respect of the previous financial year, approved and paid during the period

Six months ended 30 June

2013 2012 RMB’000 RMB’000

Final dividend in respect of the previous financial year, approved and paid during the period, of HK3 cents per ordinary share (2012: HK11 cents) 50,356 186,436 Special final dividend in respect of the previous financial year, approved and paid during the period, of HK2 cents per ordinary share (2012: nil) 33,570 —

83,926 186,436

42 9 Earnings per share The calculations of the basic earnings per share and diluted earnings per share are based on the profit for the period attributable to equity shareholders of the Company of RMB89,904,000 (six months ended 30 June 2012: RMB239,651,000) and the weighted average number of issued ordinary shares of 2,098,029,000 (six months ended 30 June 2012: 2,098,029,000 shares) during the interim period.

Interim Report 2013 The diluted earnings per share for the six months ended 30 June 2013 is the same as the basic earnings per share for the same period as taking into account the deemed issue of ordinary shares under the share option scheme (see note 21) would have an anti-dilutive effect in calculating the diluted earnings per share.

– 42 – 13 Deposits andprepaymentsforpurchaseofnon-currentassets 13 12 Lease prepayments Construction inprogress 11 Property, plantandequipment 10 is grantedlanduserightsforaperiodof50to70yearsandtherelevantleaseholdlandsarelocatedinPRC. Lease prepaymentsrepresenttheofpremiumsforlanduserightstoPRCauthorities.TheGroup Deposits andprepaymentsfor acquisition ofequipment Prepayments foracquisitionofsoftware Depreciation chargefortheperiod/year Net bookvalueasat1January As at1January rnfrfo osrcini rges11 Disposals (netcarryingamount) Transfer fromconstructioninprogress rnfrt rpry ln n qimn 10 Transfer toproperty,plantandequipment Additions Prepayments foracquisitionoflanduserights Net bookvalueasat30June/31December Additions As at30June/31December Note Note RMB’000 RMB’000 RMB’000 30 June 30 June 30 June 476,842 494,623 113,307 105,732 (21,518) 56,129 48,051 3,804 8,078 7,575 2013 2013 2013 (67) — — — 31 December 31 December 31 December RMB’000 RMB’000 RMB’000 494,623 439,141 111,961 105,737 (38,598) (68,642) 68,642 25,813 48,051 73,841 42,852 6,118 2012 2012 2012 (375) 106 43 Peak Sport Products Co., Limited Notes to the unaudited interim financial report (continued)

(Expressed in Renminbi unless otherwise indicated)

14 Intangible assets

30 June 31 December 2013 2012 RMB’000 RMB’000

Net book value as at 1 January 20,316 16,265 Additions 1,585 4,666 Amortization for the period/year (359) (615)

Net book value as at 30 June/31 December 21,542 20,316

15 Inventories (a) Inventories in the consolidated statement of financial position comprise:

30 June 31 December 2013 2012 RMB’000 RMB’000

Raw materials 49,629 45,633 Work in progress 107,901 88,244 Finished goods 182,675 252,480

340,205 386,357

(b) The analysis of the amount of inventories recognized as an expense and included in profit or loss is as follows:

Six months ended 30 June

2013 2012 RMB’000 RMB’000

Carrying amount of inventories sold recognized in cost of sales 781,012 1,004,323 Write down of inventories in administrative expenses 11,182 — Reversal of write down of inventories recognized in cost 44 of sales (6,903) —

785,291 1,004,323 Interim Report 2013

– 44 – 16 Trade andotherreceivables 16 the reportingperiodbasedonrelevantinvoicedates: Set outbelowisanaginganalysisofthetotalbalancetradereceivablesandbillsreceivableatend within sixmonthsfromthedateofissue. 2012: RMB305,880,000),whichwerederecognisedasfinancialassets.Thesebankacceptancebillsmatured As at30June2013,theGrouphadendorsedbankacceptancebillstotallingRMB139,230,000(31December All ofthetradeandotherreceivablesareexpectedtoberecoveredwithinoneyear. There werenotradedebtsthatconsideredpastdue. relevant distributionagreement. conditions. TheGroupgenerallyevaluatestherevolvingcredit ofadomesticdistributorannuallyuponrenewal purchases forthecurrentyear,andfundingneedtoexpand theretailnetworkofadistributor,andmarket distributor, theGrouptakesintoaccountfactorsincluding credithistory,prioryear’spurchases,estimated that adistributorcanowestheGroupatanyonetime.Indetermining theamountofarevolvingcreditfor The Groupoffersarevolvingcredittoeachdomesticdistributor. Thisrevolvingcreditsetsamaximumamount Within 3months Others Trade receivables Deposits andprepayments Over 1year 6 monthsto1year 3 to6months Bills receivable 1,020,911 RMB’000 RMB’000 30 June 937,015 30 June 938,615 175,719 679,894 28,077 54,219 80,213 1,600 2,789 2013 2013 31 December 31 December 1,092,894 1,021,511 RMB’000 RMB’000 968,371 362,159 622,819 29,720 41,663 53,140 36,533 2012 2012 — 45 Peak Sport Products Co., Limited Notes to the unaudited interim financial report (continued)

(Expressed in Renminbi unless otherwise indicated)

17 Pledged deposits Bank deposits have been pledged to banks as security for bank loans and bills payable (see notes 19 and 20).

18 Cash and cash equivalents

30 June 31 December 2013 2012 RMB’000 RMB’000

Cash at bank and in hand 2,211,293 2,236,890

19 Bank loans As at 30 June 2013, the bank loans were repayable as follows:

30 June 31 December 2013 2012 RMB’000 RMB’000

Within 1 year 511,843 496,224 After 1 year but within 2 years 119,867 —

631,710 496,224

As at 30 June 2013, the bank loans were secured as follows:

30 June 31 December 2013 2012 RMB’000 RMB’000

Unsecured floating rate loan — 40,542 Secured floating rate loans* 631,710 366,488 Secured fixed rate loan* — 89,194 46 631,710 496,224

* These bank loans were secured by time deposits of RMB257,901,000 (31 December 2012: RMB281,850,000) (see Note 17)

During the six months ended 30 June 2013, the bank loans carried a weighted average interest rate of 2.32% per annum (year ended 31 December 2012: 2.72%). Interim Report 2013

– 46 – 20 Trade andotherpayables 20 reporting periodbasedonrelevantinvoicedates: Set outbelowisanaginganalysisofthetotalbalancetradepayablesandbillspayableatend All ofthetradeandotherpayablesareexpectedtobesettledwithinoneyear. Over 1year Bills payable Within 3months Other payablesandaccruals Trade payables 6 monthsto1year 3 to6months RMB’000 RMB’000 30 June 30 June 343,043 127,890 195,903 215,153 204,333 19,250 1,122 9,627 2013 2013 71 31 December 31 December RMB’000 RMB’000 372,673 200,529 172,144 124,942 77,564 94,580 47,100 2012 2012 102 — 47 Peak Sport Products Co., Limited Notes to the unaudited interim financial report (continued)

(Expressed in Renminbi unless otherwise indicated)

21 Share-based payments Pursuant to the shareholders’ resolutions passed on 8 September 2009 and 18 May 2011, the Company adopted a share option scheme (“the Scheme”) whereby the Directors of the Company are authorized, at their discretion, to invite any persons (including Directors, employees, suppliers, customers and other business partners) who have made valuable contribution to the Group to take up options to subscribe for the shares of the Company.

Each option gives the holder the right to subscribe for one ordinary share in the Company and is settled gross in shares.

Details of the movements of the options granted under the Scheme are as follows:

Six months ended 30 June 2013 Year ended 31 December 2012 Weighted Weighted average Number of average Number of exercise price options ‘000 exercise price options ‘000

Outstanding at the beginning of the period/year HK$5.2752 11,695 HK$5.2729 12,740 Forfeited during the period/year HK$5.1960 (991) HK$5.1960 (915) HK$5.6040 (40) HK$5.6040 (130)

Outstanding at the end of the period/year HK$5.2813 10,664 HK$5.2752 11,695

Exercisable at the end of the period/year HK$5.2813 10,664 HK$5.2752 7,021

The share options outstanding as at 30 June 2013 had an exercise price of HK$5.1960 or HK$5.6040 (31 December 2012: HK$5.1960 or HK$5.6040) and a weighted average remaining contractual life of 1.7 years (31 December 2012: 2.2 years).

22 Income tax in the consolidated statement of financial position (a) Current tax liabilities in the consolidated statement of financial position represent:

48 30 June 31 December 2013 2012 RMB’000 RMB’000

Provision for PRC income tax 33,106 28,663 Interim Report 2013

– 48 – b Recognizeddeferredtaxassetsandliabilities (b) 22 Authorizedandissuedsharecapital 23 Share capital Deferredtaxliabilitiesnotrecognized (c) (continued) Income taxintheconsolidatedstatementoffinancialposition Ordinary sharesof Authorized: Ordinary sharesof Issued andfullypaid: HK$0.01 each HK$0.01 each future. and ithasbeendeterminedthatisprobabletheseprofitswillnotbedistributedintheforeseeable upon distributionoftheseretainedprofitsastheCompanycontrolsdividendpolicysubsidiaries December 2012:RMB88,167,000)havenotbeenrecognizedinrespectofthetaxthatwouldbepayable RMB1,744,496,000 (31December2012:RMB1,763,330,000).DeferredtaxliabilitiesofRMB87,225,000 At 30June2013,temporarydifferencesrelatingtotheundistributedprofitsofsubsidiariesamounted Deferred taxassets/(liabilities)arisingfrom: Withholding taxondividends Total deferredtaxassets Pre-operating expenses,accrualsandothers Provision ofincentiverewardsandsubsidies o fsae Amount No. ofshares o fsae Amount No. ofshares ,9,2 09018,460 20,980 2,098,029 ,0,0 50,000 5,000,000 00H$00RMB’000 HK$’000 ’000 30 June2013 30 June2013 00HK$’000 ’000 o fsae Amount No. ofshares ,9,2 09018,460 20,980 2,098,029 o fsae Amount No. ofshares ,0,0 50,000 5,000,000 RMB’000 31 December2012 31 December2012 30 June 00H$00RMB’000 HK$’000 ’000 (73,346) 18,230 10,628 7,602 2013 00HK$’000 ’000 31 December RMB’000 (66,662) 37,714 23,566 14,148 2012 49 Peak Sport Products Co., Limited Notes to the unaudited interim financial report (continued)

(Expressed in Renminbi unless otherwise indicated)

24 Reserves (a) Share premium The application of the share premium of the Company is governed by the Companies Law (Revised) of the Cayman Islands. The share premium is distributable to the shareholders of the Company provided that immediately following the date on which a distribution or dividend is proposed to be paid, the Company will be in a position to pay off its debts as they fall due in the ordinary course of business.

(b) Statutory reserve Pursuant to applicable PRC regulations, the PRC subsidiaries of the Group are required to appropriate 10% of their after-tax-profit (after offsetting prior year losses) to the statutory reserve until the reserve reaches 50% of the registered capital. The transfer to the reserve must be made before distribution of dividends to equity holders. The statutory reserve can be used upon approval by the relevant authorities to offset the accumulated losses or to increase the registered capital of the subsidiary, provided that the balance of the reserve after such increase is not less than 25% of its registered capital.

(c) Other reserve The other reserve of the Group represents the difference between the nominal value of the shares issued by the Company as a consideration to acquire Peak (Hong Kong) International Company Limited (“Peak Hong Kong”) and the historical carrying value of Peak Hong Kong’s share capital and share premium.

(d) Exchange reserve The exchange reserve of the Group comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations.

(e) Share-based payment reserve The share-based payment reserve represents the fair value of services provided by persons who have made valuable contribution to the Group and the Company has granted share options to those persons. The relevant services are recognized in accordance with IFRS 2, “Share-based payment”.

25 Commitments (a) Capital commitments Capital commitments outstanding as at the end of the reporting period that were not provided for in the consolidated financial statements are as follows:

30 June 31 December 50 2013 2012 RMB’000 RMB’000

Contracted for 177,976 227,431 Authorized but not contracted for 27,057 23,575

Interim Report 2013 205,033 251,006

– 50 – b Operatingleasescommitments (b) 25 Commitments (continued) b Leaseoflandandproperties (b) Keymanagementpersonnelcompensation (a) Material relatedpartytransactions 26 contingent rentals. more thantenyears.Someoftheleaseshaveoptionstorenewuponexpiry.Noneincludes The Groupleasesanumberofpropertiesunderoperatingleases.leaseperiodsrangefromoneto on normalcommercialtermsand intheordinarycourseofbusiness. The DirectorsoftheCompany areoftheopinionthataboverelatedpartytransaction wasconducted RMB1,129,000). the sixmonthsended30June2013wereRMB1,129,000(six monthsended30June2012: Group Co.,Ltd,whichiscontrolledbycontrollingshareholders oftheCompany.Therentalexpensesfor During thesixmonthsended30June2013,Groupleased certainlandandpropertiesfromFujianPeak Directors, isasfollows: Remuneration forkeymanagementpersonneloftheGroup,includingamountspaidtoCompany’s reporting periodarepayableasfollows: The totalfutureminimumleasepaymentsundernon-cancellableoperatingleasesattheendof The aboveremunerationisincludedin“staffcosts”(note6(b)). After 5years After 1yearbutwithin5years Equity-settled share-basedpayments Short-term employeebenefits Contributions todefinedcontributionretirementplans Within 1year Six monthsended30June RMB’000 RMB’000 30 June 28,622 18,117 3,351 3,197 1,754 8,751 2013 2013 122 32 31 December RMB’000 RMB’000 27,980 17,746 3,156 2,760 3,436 6,798 2012 2012 367 29 51 Peak Sport Products Co., Limited Notes to the unaudited interim financial report (continued)

(Expressed in Renminbi unless otherwise indicated)

26 Material related party transactions (continued) (c) Transactions and balances with related parties During the six months ended 30 June 2013, the Group had amounts due to entities controlled by the Company’s controlling shareholders, Mr. Xu Jingnan and Mr. Xu Zhihua, with a maximum balance of RMB51,771,000.

As at the end of reporting period, the Group had the following balance with the entity controlled by Mr. Xu Jingnan:

30 June 31 December 2013 2012 RMB’000 RMB’000

Amount due to a related party — 1,257

The amount due to the related party was unsecured, non-interest bearing and had no fixed term of repayment.

27 Pledge of assets At 30 June 2013, the bills payable and bank loans of the Group were secured by certain bank deposits, lease prepayments and buildings. The aggregate net book value of assets pledged amounted to approximately RMB378,785,000 (31 December 2012: RMB421,124,000).

52 Interim Report 2013

– 52 – non-compliance oftheWrittenGuidelineswasnotedby Companyduringthesixmonthsended30June2013. or employment,islikelytopossessinsideinformationinrelation totheCompanyoritssecurities.Noincidentof Company oradirectoremployeeofsubsidiaryholding companyoftheCompanywho,becausesuchoffice the requiredstandardssetoutinModelCode.Forthis purpose, “RelevantEmployee”includesanyemployeeofthe respect oftheirdealingsinthesecuritiesCompany(the “WrittenGuidelines”)ontermsnolessexactingthan The Companyhasestablishedwrittenguidelinesfortherelevant employeesoftheGroup(the“RelevantEmployees”)in the RelevantEmployees Compliance withtheWrittenGuidelines forSecuritiesTransactionsby the requiredstandardssetoutinModelCodethroughoutsixmonthsended30June2013. the Company.AllDirectorshaveconfirmed,followingspecificenquirybyCompany,thattheycompliedwith The CompanyhasadoptedtheModelCodeasitsowncodeofconductregardingdirectors’securitiestransactionsin Directors Compliance withtheModelCodeforSecuritiesTransactionsby approved forissuebytheBoardon13August2013. regarding theGroup’sinternalcontrolsystemandfinancialreportingmatters.Theinterimreporthasbeen ended 30June2013.TheAuditCommitteehasalsometanddiscussedwiththeGroup’sexternalauditor,KPMG, reviewed theaccountingprinciplesandpracticesadoptedbyGroupGroup’sresultsforsixmonths The AuditCommitteeoftheCompany,consistingCompany’sthreeindependentnon-executiveDirectors,has Review ofInterimResults later than4:30p.m.on13September2013. at Shops1712–1716,17thFloor,HopewellCentre,183Queen’sRoadEast,Wanchai,HongKong)forregistrationnot lodged withtheCompany’sshareregistrarandtransferoffice(i.e.ComputershareHongKongInvestorServicesLimited Company shouldensurethatallsharetransferdocumentsaccompaniedbythecorrespondingcertificatesare order tobequalifiedfortheinterimdividendandspecialdividend,unregisteredholdersofshares inclusive) forthepurposeofdeterminingentitlementtointerimdividendandspecialdividend.In The registerofmemberstheCompanywillbeclosedfrom16September2013to18(bothdays Closure ofRegisterMembers equity shareholders,areexpectedtobepaidtheCompany’sshareholderson26September2013. amount approximatelytoRMB133.7millionandrepresent148.7%ofthenetprofitforperiodattributable share forthesixmonthsended30June2013.Theinterimdividendtogetherwithspecialdividend,which ordinary shareandaspecialinterimdividendofHK6cents(equivalenttoapproximatelyRMB4.8cents)per The BoardhasresolvedtodistributeaninterimdividendofHK2cents(equivalentapproximatelyRMB1.6cents)per Interim Dividends Information Supplementary 53 Peak Sport Products Co., Limited Supplementary Information (continued)

Corporate Governance The Company believes that good corporate governance practices are very important for maintaining and promoting investor confidence and for the sustainable growth of the Group. The Company has made continuous efforts to maintain and uplift the quality of corporate governance so as to ensure an effective Board, a sound internal control system, and transparency and accountability to its shareholders. The Board is of the view that the Company has complied with all the code provisions set out in the Corporate Governance Code as contained in Appendix 14 of the Listing Rules during the six months ended 30 June 2013, except for the deviation from the code provision A.6.7. The deviation arose as three non-executive Directors and one independent non-executive Director of the Company were unable to attend the annual general meeting of the Company held on 7 May 2013 due to their unavoidable business engagements.

Directors’ Interests and Short Positions in Shares, Underlying Shares and Debentures As at 30 June 2013, the interests of the Directors in the shares and underlying shares of the Company as recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO, or as otherwise notified to the Company and the Hong Kong Stock Exchange pursuant to the Model Code, or as known by the Company, were as follows:

(A) Long position in ordinary shares of the Company

Percentage+ of Number of the Company’s ordinary shares issued share Name of director Capacity Note interested capital

Mr. Xu Jingnan Interest held by controlled 1 841,539,020 40.11% corporation Ms. Wu Tigao Interest held by controlled 1 841,539,020 40.11% corporation Mr. Xu Zhida Interest held by controlled 2 276,460,000 13.18% corporation Mr. Xu Zhihua Interest held by controlled 3 273,060,000 13.02% corporation Mr. Shen Nanpeng Interest held by controlled 4 76,516,451 3.65% corporations

54 Notes:

1. These shares were held by Ever Sound Development Limited, the entire issued share capital of which was owned as to 70% by Mr. Xu Jingnan and 30% by Ms. Wu Tigao.

2. These shares were held by Brilliant Lead Group Limited, a corporation wholly owned and controlled by Mr. Xu Zhida.

3. These shares were held by Alpha Top Group Limited, a corporation wholly owned and controlled by Mr. Xu Zhihua. Interim Report 2013

4. These shares were held by the following three investment funds managed by Sequoia Capital China Advisors Limited, a wholly owned subsidiary of SNP China Enterprises Limited: Sequoia Capital China Growth Fund I, L.P. (for 66,737,649 shares); Sequoia Capital China Growth Partners Fund I, L.P. (for 1,591,542 shares); and Sequoia Capital China GF Principals Fund I, L.P. (for 8,187,260 shares). The general partner of these investment funds was Sequoia Capital China Growth Fund Management I, L.P. SC China Holding Limited, a wholly owned subsidiary of SNP China Enterprises Limited, was the general partner of Sequoia Capital China Growth Fund Management I, L.P. As SNP China Enterprises Limited was wholly owned by Mr. Shen Nanpeng, he was deemed to be interested in these shares in which SNP China Enterprises Limited had deemed interest as mentioned above pursuant to the SFO.

– 54 – + (B) Debentures (continued) Directors’ InterestsandShortPositionsinShares,UnderlyingShares Hong KongStockExchange. referred totherein,orwhichwererequired,pursuanttheModelCode,benotifiedCompanyand provisions oftheSFO)orwhichwererequired,pursuanttoSection352SFO,beenteredinregister Part XVoftheSFO(includinginterestsandshortpositionswhichhe/shewasdeemedortakentohaveundersuch were requiredtobenotifiedtheCompanyandHongKongStockExchangepursuantDivisions78of debentures oftheCompanyoranyitsassociatedcorporations(withinmeaningPartXVSFO)which Directors orthechiefexecutiveofCompanyhadanyinterestsshortpositionsinshares,underlyingshares Save asdisclosedaboveandinthebelowsectionheaded“ShareOptionScheme”,at30June2013,noneof

Company’s issuedsharesasat30June2013. The percentagerepresentsthenumberofordinaryshares/underlyingsharesinteresteddividedby derivatives Long positioninunderlyingsharesoftheCompany—physicallysettledunlistedequity . DetailsoftheaboveshareoptionsgrantedbyCompanyasrequiredtobedisclosedpursuantListingRulesareset 2. Mr.XuZhidawasdeemedtobeinterestedinthese300,000shareoptionsoftheCompanyownedbyhisspouse,Ms.WuBingrui, 1. Notes: aeo ietrCapacity Name ofdirector r in igBnfca we 0,0 0.01% 0.01% 0.01% 200,000 200,000 300,000 2 2 1&2 Beneficialowner Interestheldbyspouse Beneficialowner Mr. WangMingquan Dr. XiangBing Mr. XuZhida “Share OptionScheme”below. Note shares inrespect options granted of theshare Number of underlying out inthesectionheaded shares overthe Percentage issued share pursuant totheSFO. Company’s underlying capital + of 55 Peak Sport Products Co., Limited Supplementary Information (continued)

Substantial Shareholders’ Interests and Short Positions in Shares, Underlying Shares and Debentures As at 30 June 2013, the following parties had interests of 5% or more in the issued share capital of the Company according to the register of interests required to be kept by the Company pursuant to Section 336 of the SFO:

(A) Long position in ordinary shares of the Company

Percentage+ of Number of the Company’s ordinary shares issued share Name of substantial shareholder Capacity Note interested capital

Ever Sound Development Limited Beneficial owner 1 841,539,020 40.11% Brilliant Lead Group Limited Beneficial owner 2 276,460,000 13.18% Ms. Wu Bingrui Interest held by spouse 3 276,460,000 13.18% Alpha Top Group Limited Beneficial owner 4 273,060,000 13.02%

Notes:

1. The above interest of Ever Sound Development Limited was also disclosed as the interest of each of Mr. Xu Jingnan and Ms. Wu Tigao in the above section headed “Directors’ Interests and Short Positions in Shares, Underlying Shares and Debentures”.

2. The above interest of Brilliant Lead Group Limited was also disclosed as the interest of Mr. Xu Zhida in the above section headed “Directors’ Interests and Short Positions in Shares, Underlying Shares and Debentures”.

3. Ms. Wu Bingrui was deemed to be interested in these shares of the Company through the interest of her spouse, Mr. Xu Zhida. Such interest of Mr. Xu Zhida was disclosed in the above section headed “Directors’ Interests and Short Positions in Shares, Underlying Shares and Debentures”.

4. The above interest of Alpha Top Group Limited was also disclosed as the interest of Mr. Xu Zhihua in the above section headed “Directors’ Interests and Short Positions in Shares, Underlying Shares and Debentures”.

(B) Long position in underlying shares of the Company — physically settled unlisted equity derivatives

Number of Percentage+ of underlying shares underlying in respect of the shares over the share options Company’s issued Name of substantial shareholder Capacity granted share capital

56 Ms. Wu Bingrui Beneficial owner 300,000 (Note) 0.01%

Note: This interest was also disclosed as the interest of Mr. Xu Zhida in the above section headed “Directors’ Interests and Short Positions in Shares, Underlying Shares and Debentures”.

+ The percentage represents the number of ordinary shares/underlying shares interested divided by the number of the

Interim Report 2013 Company’s issued shares as at 30 June 2013.

Save as disclosed above, as at 30 June 2013, no person, other than the Directors whose interests are set out in the section headed “Directors’ Interests and Short Positions in Shares, Underlying Shares and Debentures” above, had registered an interest or a short position in the shares or underlying shares of the Company as recorded in the register of the Company required to be kept pursuant to Section 336 of the SFO.

– 56 – r agMnqa ue21 K5646,0 000A A 60,000 60,000 — — — — — — — — 60,000 60,000 HK$5.604 HK$5.604 (International Sales)) (Sales Officer 1June2010 Ms. WuBingrui Substantial Shareholder 1June2010 Mr. WangMingquan Dateofgrant Dr. XiangBing Independent option holder Name orcategoryof nageae1Jn 00H$.0 7,0 1,0)4900A 459,000 D (12,000) 2,519,700 — (299,100) — — — — 471,000 — HK$5.604 2,818,800 HK$5.196 1June2010 9February2010 In aggregate In aggregate Employees oftheGroup Non-executive Directors follows: Details ofthemovementsoptionsgrantedunderSchemeforsixmonthsended30June2013areas interests of,ourGroupandtoenableattractretainhigh-calibreemployeesbusinesspartners. to provideincentiveorrewardtheEligiblePersonsfortheircontributionto,andcontinuingeffortspromote business partnersofanymemberourGroup)tosubscribefortheCompany’sshares.ThepurposeSchemeis Company maygrantshareoptionsto“EligiblePersons”(includingdirectors,employees,suppliers,customersorother shareholders oftheCompanypassedon8September2009and18May2011respectively(the“Scheme”), Pursuant totheCompany’sshareoptionschemewhichwasadoptedandamendedbyresolutionsof Share OptionScheme ue21 K5649,0 000A 90,000 — — — — 90,000 HK$5.604 1 June2010 price pershare Exercise Outstanding 16500———(,3,0)10,664,000 (1,031,000) — — — 11,695,000 ,7,0 4,0)1,530,000 (40,000) — — — 1,570,000 ,6,0 3680 ,7,0 F E 8,434,000 3,379,600 2,534,700 (991,000) (386,800) (305,100) — — — — — — — — — 9,425,000 3,766,400 2,839,800 1/1/2013 0,0 200,000 — 200,000 — — — — — — — 200,000 200,000 2,0 2,0 C 300,000 120,000 — — — — — — — — 300,000 120,000 2,0 1,0)6200C B 612,000 459,000 (16,000) (12,000) — — — — — — 628,000 471,000 000————8,0 C B 80,000 C 60,000 B — 80,000 — 60,000 — — — — — — — — — — — — — 80,000 — 60,000 80,000 60,000 000————9,0 B 90,000 — — — — 90,000 as at during the Granted period during the Exercised Number ofoptions period during the Cancelled period during the Forfeited period Outstanding 30/06/2013 as at Exercise (Note 1) 57 period Peak Sport Products Co., Limited Supplementary Information (continued)

Share Option Scheme (continued)

Notes:

1. The respective exercise periods of the share options granted are as follows:

A: From 1 June 2011 to 31 May 2015

B: From 1 June 2012 to 31 May 2015

C: From 1 June 2013 to 31 May 2015

D: From 9 February 2011 to 8 February 2015

E: From 9 February 2012 to 8 February 2015

F: From 9 February 2013 to 8 February 2015

The vesting period of the share options is from the date of grant until the commencement of the exercise period.

2. The number and/or exercise price of the options may be subject to adjustment in the case of rights or bonus issues, or other changes in the Company’s share capital.

Purchase, Sale or Redemption of the Company’s Listed Shares Neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the Company’s listed shares during the six months ended 30 June 2013.

Investor Relations and Communications with Shareholders The Company highly values its relationship with its shareholders and other stakeholders. It has put in place an effective corporate communication system which provides transparent, regular and timely public disclosures to its shareholders and other stakeholders. The shareholders’ communication policy is available on the Company’s website www.peaksport.com under the “Investor Relations” section.

In addition, the Company has established the investor relations department with designated senior management for maintaining regular dialogue with institutional investors and analysts to keep them abreast of the Company’s developments. Enquiries from shareholders and other stakeholders are dealt with in an informative and timely manner. Shareholders and other stakeholders may write directly to the Company at its principal place of business in Hong Kong or via email to [email protected] for any enquiries.

58 In accordance with the Listing Rules, the Company has ascertained shareholders’ wishes regarding their preferences on the language (i.e. English and/or Chinese) and means of receipt (i.e. in printed form or via the Company’s website) of the Company’s corporate communications#. Shareholders who have chosen/are deemed to have chosen to receive the corporate communications via the Company’s website, and who for any reason have difficulty in receiving or gaining access to the Company’s corporate communications will promptly upon request be sent the corporate communications in printed form free of charge. Shareholders have the right at any time to change their choice of language and means

Interim Report 2013 of receipt of the Company’s corporate communications.

– 58 – # both EnglishandChineseversionsofthisreportsincelanguagesareboundtogetherintoonebooklet. Shareholders whohavechosentoreceivethecorporatecommunicationsineitherEnglishorChineseversionwill [email protected]. Centre, 183Queen’sRoadEast,Wanchai,HongKong.Shareholdersmayalsosendsuchanoticebyemailto writing totheCompany’sshareregistrar,ComputershareHongKongInvestorServicesLimited,at17MFloor,Hopewell language andmeansofreceipttheCompany’scorporatecommunicationsbysendingreasonablepriornoticein Shareholders mayrequestforprintedcopyoftheCompany’scorporatecommunicationsorchangetheirchoice Investor RelationsandCommunicationswithShareholders(continued) securities, includingbutnotlimitedto:(a)annualreport;(b)interim(c)noticeofmeeting;(d)listingdocument;( The Company’scorporatecommunicationsrefertoanydocumentissuedorbebytheCompanyforinformationactio e) circular;and(f)formofproxy. n ofholdersanyits 59 Peak Sport Products Co., Limited Glossary

In this interim report, unless the context states otherwise, the following terms shall have the following meanings:

“Board” The board of directors of the Company

“Company” Peak Sport Products Co., Limited

“Director(s)” Director(s) of the Company

“FIBA” Fédération Internationale de Basketball

“Group” or “Peak” The Company and its subsidiaries altogether

“Hong Kong Stock Exchange” The Stock Exchange of Hong Kong Limited

“Listing Rules” Rules Governing the Listing of Securities on the Hong Kong Stock Exchange

“Model Code” Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 to the Listing Rules

“NBA” National Basketball Association

“PRC” or “China” The People’s Republic of China

“SFO” The Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended, supplemented or otherwise modified from time to time

60 Interim Report 2013

– 60 – Peak Sport Products Co., Limited 司公限有品用育體克匹