Yue Yuen Industrial (Holdings) Limited fiscal first quarter ended December 31, 2005 turnover increased by 17.6% to $878.0 million and net profit increased by 16.0% year-on-year to $85.9 million. Due to the adoption of new Hong Kong Financial Reporting Standards, net profit of the first quarter of FY2005 has been restated to $74.0 million from $77.1 million and the net profit growth would have been 11.4% year-on-year before restatement.

The Group reported encouraging results for the period under review in light of sustained sales growth. Total footwear production amounted to 49.5 million pairs, an increase of 6.2% compared with the corresponding period of the previous year.

Turnover from wholesales and retail operations in the Greater China region jumped 142% to $65.1 million, thanks to blooming domestic consumption in China. By the end of 2005, the Group operated over 600 shops/counters in the mainland China. Also, contributing to the results for the period was the increase in share of profits from associates and jointly controlled entities, which bought in U$14.6 million compared to $7.4 million in the previous year.

Following a strong performance in the first quarter of FY2006, the Group continued to record
exciting turnover growth in the first two months of the second quarter of FY2006 (January and
February of 2006), with aggregate revenue amounted to US$553.2 million, a rise of 18.8% year-onyear.
The continued growth in the core manufacturing business as well as the increased
contributions from wholesales and retail operations underpinned the Group’s operating performance.

“There is improvement in the operation but we still expect challenges ahead. The Group will closely
monitor the potential impact of the trade dispute and increase in production costs in the remainder of
the year,” said Mr. Tsai Chi Neng, Chairman of the Group.