Yue Yuen First Half Turnover Increases 10.6%

Yue Yuen Industrial (Holdings) Limited saw turnover and profit attributable to equity holders of the company increase year-on-year by respectively 10.6% to $1.90 billion and 0.8% to $169.6 million. Excluding accounting adjustments on two outstanding convertible bonds, profit attributable to equity holders of the company would have increased 9.6% to $173.6 million.

The Board of Directors has resolved to recommend payment of an interim dividend of HK$0.31 per
share, an increase of 6.9% from HK$0.29 per share last year.

Operations

During the period under review, the Group recorded stable sales growth for the footwear
manufacturing operation whereas the growth momentum of the Greater China wholesale and retail
operations remained strong. The total volume of shoes produced rose by 14.9% year-on-year to 111
million pairs, thanks to the support of our existing customers and orders from new customers. To
supplement the business growth, the Group has added 14 new production lines over the last six
months, bringing the total number of lines to 387 by the end of March 2007. The Group is committed
to improve production efficiency in light of the challenges from increase in wages and currency
fluctuations.

The sales contributions from the wholesale and retail operations in the Greater China region
continued to increase and accounted for about 10% of the Group’s total turnover for the period under
review. The revenue from the wholesale and retail operations jumped 37.0% year-on-year to
US$189.0 million, which was mainly derived from the Group’s 820 self-run and 430 franchised
stores/counters, respectively, as well as the wholesale operations in the Greater China region. In
addition, the Group’s associated companies operated about 950 self-run and franchised
stores/counters. The Group has accelerated investment in the operations through organic growth and
strategic acquisitions. As a result, the total number of self-run and franchised stores/counters in
China under the Group and its affiliates stood at about 2,200 by the end of March 2007.

Footwear manufacturing remained the Group’s major operation accounting for 77.4% of total sales,
whereas soles and components accounted for 11.8% of total sales. Retail sales accounted for 9.9% of
total sales, compared to 8.0% last year. With the surge in retail sales, Asia has become the second
largest market for the Group and the turnover distribution among three major markets, the USA,
Europe and Asia, has become more balanced.

Looking Forward

In the first two months of the third quarter of FY2007 (April and May of 2007), the Group’s total
turnover amounted to approximately $713.8 million, an increase of 6.6% year-on-year. For the
remainder of the year, the sales growth for the footwear and China retail operations will remain on
track.

In tandem with the business growth, the Group will continue to expand production facilities in its
three existing production bases, China, Vietnam and Indonesia. Also, the Group will spearhead the
investment in the China wholesale and retail operations and the contributions from these operations
will become more significant.

“The Group has demonstrated flexibility in production amid the current rapidly changing
environment and its commitment in China wholesale and retail operations will bode well for further
growth,” said Mr. Tsai Chi Neng, chairman of the Group.