Yue Yuen Industrial : Announces 2014 First Half Results

PRESS RELEASE

 Turnover up 6.8 % to US$ 3.95 billion compared to the same period last year

 Gross profit was up 13.7 % to US$ 885.5 million

 Recurring operating profit attributable to Owners of the Company was up 14.5 % to US$ 218.1 million

 Non-recurring operating loss attributable to Owners of the Company for the period amounted to US$ 116.7 million

 Total net profit attributable to Owners of the company amounted to US$ 101.4 million, down 47.8%

compared to US$ 194.4 million in the same period last year
(Hong Kong, August 14, 2014) - Yue Yuen Industrial (Holdings) Limited ("the Group", stock code: 551) today announced its unaudited consolidated results for the first half of Fiscal Year 2014 from January 1, 2014 to June
30, 2014.
Total turnover of the Group rose 6.8 % for the period to approximately US$ 3,951.3 million. Recurring operating profit was up 14.5 % to US$ 218.1 million compared to the same period last year. The Group also had a non-recurring loss for the half year of approximately US$ 116.7 million, which mainly consists of US$ 90 million of provision for contributions to social insurance benefit and housing provident fund (collectively the "Employee Benefit Payments") for employees in China and US$ 25.2 million of losses due to fair value changes on derivative financial instruments. For the same period last year, the non-recurring amount was a profit of US$ 3.9 million. The net profit attributable to Owners of the Company for the first half 2014 amounted to approximately US$
101.4 million.
The Board is pleased to declare an interim dividend of HK$0.35 per share for this period: no change compared to the first six months of fiscal 2013 ending June 30, 2013.

Revenue

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Sales of athletic shoes and casual/outdoor shoes were up by 1.1% and 14.2% respectively. Total shoe manufacturing volume was almost unchanged at 158.0 million pairs produced for the period.
With regards to the retail and wholesale business of sportswear in the Greater China Region, sales increased by
12.4 % to US$ 963.2 million in the six months period compared to US$ 856.9 million recorded in the same period last year, due to factors such as strategies to improve sales efficiency per shop and selectively using discount pricing to reduce inventory.

During the period, the Group's gross profit increased by 13.7 % to US$ 885.5 million. When looking at the underlying business units, gross profit for the manufacturing operations involving international performance brands increased primarily due to total direct labor and production overhead costs remained almost unchanged compared to the same period last year though total material costs increased 8.4% year on year. Pou Sheng had a gross profit increase of 15.4% to US$ 287.9 million on account of the greater focus on the retail business and less severe discounting activities compared to the same period last year.

For the Group, the sum of Selling & distribution expenses and Administrative expenses increased by 8.0%
compared to the same period last year. For the manufacturing operations, the sum of these items increased by
5.6% compared to the same period last year, whereas for Pou Sheng the sum of these items increased by 9.8%
when compared with the same period last year.

For the Group, Other expenses increased by 95.2% compared to the same period last year. Most of this difference was due to the US$90 million provision for contributions to the Employee Benefit Payments for employees of the Group's China factories: please refer to the announcements dated April 17, 2014, April 25,

2014, May 20, 2014 and August 5, 2014 , for details.

During the period, the Group recorded a loss of US$25.2 million due to fair value changes on derivative financial instruments. The loss was attributed to the volatility and depreciation of RMB in the first half of 2014.

At the Group level, Share of A&JV increased by 26.8 % to US$ 30.6 million. For the manufacturing operations, Share of A&JV experienced an increase of 17.1% to US$ 32.4 million. For Pou Sheng, share of loss from A&JV was reduced by 49.6% to a loss of US$ 1.8 million.
Yue Yuen Industrial (Holdings) Limited
www.yueyuen.com
Jerry Shum
Investor Relations Director
Tel: 3183 0888
Fax: 3183 0808
E-mail: jerry.shum@yueyuen.com

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For the six months ended June 30, 2014

2014

6 months

2013

6 months

US$'000 US$'000

Turnover 3,951,335 3,699,323

Cost of sales (3,065,870) (2,920,673)

Gross profit 885,465 778,650

( % of turnover ) 22.41% 21.05%

Share of results of joint ventures 11,384 7,717

Profit before taxation 125,564 198,778

Income tax expense (21,454) (8,489)

Profit for the period 104,110 190,289

( % of turnover ) 2.63% 5.14%

Attributable to:

Owners of the Company 101,444 194,446

( % of turnover ) 2.57% 5.26%

Non-controlling interests 2,666 (4,157)

104,110 190,289

By Category:

Recurring operating Profit 218,117 190,568

( % of turnover ) 5.52% 5.15%

Non-recurring operating (loss) profit (116,673) 3,878

Net Profit attributable to Owners of the Company 101,444194,446

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