Li and Fung Reports 36% Revenue Jump in 2007

For the year ended December 31, 2007, the Group’s turnover was HK$92.5 billion ($11.85 bn), 36% higher than 2006, reflecting the largest turnover growth since 2000. The Group’s core operating profit increased by 36% to HK$3.19 billion ($408.5 mm). Profit attributable to shareholders reached HK$3.1 billion (392.2 mm), an increase of 39% over 2006. Basic earnings per share were 89.5 HK cents ($0.11), an increase of 33% compared to 67.1 HK cents ($0.09) in 2006.

The robust performance continued to reflect the Group’s solid organic growth, as well as growth via acquisitions. In addition to increasing existing market penetration, the Group further expanded its market share in a significant way in 2007 through strategic acquisitions including Regatta, Peter Black International Ltd and CGroup. These acquisitions provide excellent platforms for new sources of growth in the proprietary brands, footwear, as well as health, beauty and cosmetics businesses.

The Group has also successfully achieved the 2005-2007 Three-Year Plan target of US$1 billion turnover for the US onshore business. This business, collectively known as LF USA has grown tremendously since 2004. It is a major private label company, a key player in proprietary brands, and has one of the largest licensed portfolios in the US.

Mr. William K Fung, Group Managing Director of Li & Fung Limited, commented, “We are delighted to report excellent growth in 2007 despite the mid-year softening of the US market. The results well-exceeded our 2005-2007 Three-Year Plan target of US$10 billion in turnover by end of 2007, providing a very strong conclusion to that Three-Year Plan. Of significance during this period was the Group’s steadfast commitment to reinvesting in our back office infrastructure as well as the successful execution of our two-pronged acquisition strategy, which has laid a solid foundation for our future growth.”

Three-Year Plan 2008-2010 The new Three-Year Plan’s targets are to reach US$20 billion in turnover, of which US$16 billion will come from the core sourcing business and US$4 billion from the onshore businesses in the US, Europe, and China. The Group is also targeting to achieve US$1 billion in core operating profit and has set a target to achieve operating leverage of doubling income percentage growth over turnover percentage growth (i.e. 2x) by the end of this new Three-Year Plan.

Mr. Fung commented, “This year marks the first year of the Group’s Three-Year Plan 2008-2010. While the new Three-Year Plan is commencing against the backdrop of a soft consumer market in the U.S., it has made a good start with a strong flow of orders to-date. Because of our asset-light model and extremely flexible sourcing network, the management is confident that they can navigate around the current uncertainties surrounding the global market. In addition, we expect the momentum of companies outsourcing their buying activities to Li & Fung will accelerate in the current weak market conditions. We will also continue to pursue acquisitions in this Plan period to complement our organic business growth.”

Mr. Bruce Rockowitz, President of Li & Fung (Trading) Limited, said, “We are very excited about the growth opportunities within our core business as well as the opportunities presented by our onshore business model. The new Three-Year Plan contains more growth drivers than ever before. We will be expanding our footwear, and health, beauty and cosmetics businesses. We also plan to duplicate our successful US onshore business model in Europe and China as part of this Three-Year Plan. With our strong sourcing and design capabilities, we are well-positioned to take the Group to new heights.”