Yue Yuen Industrial Limited announced its unaudited consolidated results for the half year ended March 31, 2005. Turnover rose year-on-year by 17.4% to $1,477.9 million and net profit fell year-on-year by 3.8% to $152.3 million for the six month period. Earnings per share declined by 4.1% to 9.4 cents compared with 9.8 cents for the same period last year. The net profit would have increased by 15.4% for the first half of fiscal year 2005 when not taking into account the $26.3 million contribution from disposal of investment securities for the corresponding period last year.

The Board of Directors has resolved to declare an interim dividend of HK$0.27 per share, an increase of 8% from HK$0.25 per share last year.


During the period, the group recorded strong revenue growth from its core manufacturing operation and
retail sales in greater China. The operating environment for footwear manufacturing remained difficult due to
the increase in crude oil prices and labor costs in the Pearl River Delta region. The group has kept up the
effort to contain the increase in overall production overheads and selling and administrative expenses but the
market resistance remained strong. In addition, the moderate rise in the average selling price could only
partially offset the general increase in material prices.

Total number of shoes produced during the period increased year-on-year by 11.4% to 90.4 million pairs
compared with 81.2million pairs last year. The various product categories faced balanced growth. There
was encouraging growth in all major markets by geographical distribution and sales to North America were
particularly strong. Additionally, the growth momentum for retail sales operations in greater China and
apparel manufacturing remained intact. Retail sales now accounted for over 4% of the group’s total revenue.

As of March 2005, the group operated about 330 production lines (September 2004: 309 lines) located in
China, Vietnam and Indonesia. The increase in production capacity was in line with the strong volume
growth. The Group established a wholesale network of about 900 distributors for its licensed brands and
operated about 480 retail stores/counters selling branded athletic footwear and apparel in major cities of

Combined contributions from associates and jointly controlled entities amounted to $17.5 million for the
period under review compared with $17.7 million last year. However, there was a one off contribution of
about $4.5 million last year from the disposal of investment securities by one of our jointly controlled
entities, Symphony Holdings Limited.

Looking Forward

The group’s revenue growth momentum continues to be strong. For the period from April to May 2005 in
the third quarter of fiscal year 2005, the group’s revenue grew year-on-year by 11.9% to approximately
$558.3 million despite being on a higher base of comparison. The back to school orders remained
healthy, with the group confident in recording satisfactory revenue growth for the full year.