Yue Yuen Industrial : Announces 1st Quarter Result for 2014

PRESS RELEASE

Yue Yuen Announces 1st Quarter Result for 2014

 Turnover up 7.3% to US$1.83 billion compared to the same period last year

 Gross profit up 19.5% to US$419.16 million compared to US$350.87 million in the same period last year

 Recurring operating profit attributable to Owners of the Company increased by 56.2% to

US$94.65 million compared to the same period last year

 Non-recurring operating loss for the period amounted to US$24.45 million.

 Total net profit attributable to Owners of the Company amounted to US$70.20 million in 2014, up

13.9% compared to US$61.61 million in the same period last year.

(Hong Kong, May 14, 2014) - Yue Yuen Industrial (Holdings) Limited ("the Group", stock code: 00551)

today announced its unaudited consolidated results for the three month period ended March 31, 2014.

Total turnover of the Group rose 7.3% for the period to approximately US$1,833 million. Recurring operating profit amounted to US$94.65 million. The Group also had non-recurring operating loss of US$24.45 million for the period. Please refer to the section Management Discussion and Analysis in the Company's announcement that provides more details of the items that give rise to non-recurring operating loss. When aggregating both categories of profit, the net profit attributable to Owners of the Company for the first three months of fiscal year 2014 amounted to approximately US$70.20 million.

Business Review Total Turnover by Product Category

(unaudited) 2014

3 months ended

March 31

2013

3 months ended

March 31

(all figures rounded to millions )
	US$ millions	%	US$ millions	%	%change
Athletic Shoes	875.0	47.7	865.5	50.6	1.1
Casual/Outdoor Shoes	327.9	17.9	281.5	16.5	16.5
Sports Sandals	34.2	1.9	29.2	1.7	17.1
Retail Turnover	464.4	25.3	414.2	24.2	12.1
Soles, Components & Others	132.3	7.2	119.1	7.0	11.1
Total Turnover	1,833.8	100.0	1,709.5	100.0	7.3

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Turnover of athletic shoes and casual/outdoor shoes were up by 1.1% and 16.5% respectively year over year. Total shoe manufacturing volume was down by 0.5% to 75.97 million pairs for the three month period.

With regards to the retail and wholesale business of sportswear in the Greater China region, turnover increased by 12.1% to US$464.4 million in 2014 compared to US$414.2 million recorded in the same period last year.

Gross Profit

During the period, the Group's gross profit increased by 19.5% to US$419.16 million. When looking at the underlying business units, gross profit for the manufacturing operations involving international performance brands benefited from better control of production overhead and wage costs. When examined on a sequential basis, manufacturing margin was better on account of tighter control of material costs. Pou Sheng had a gross profit improvement of 18.3% to US$139.4 million due to its new structure of concentrating on the retail business.

Selling & distribution expenses and Administrative expenses

For the Group, Selling & distribution expenses grew by 2.0% year on year. Administrative expenses grew by

11.7% compared to the same period last year. For the manufacturing operations, Selling & distribution expenses and Administrative expenses increased by 3.6% and 5.1% respectively year on year. Based on Pou Sheng's announced figures, Selling & distribution expenses and Administrative expenses were up 1.4% and 53.0% respectively.

Share of results from Associates and Joint Ventures (" Share of A&JV ")

At the Group level, Share of A&JV grew by 114.4% to US$15.6 million. For the manufacturing operations, Share of A&JV increased by 47.8% to US$16.3 million. From Pou Sheng's announcement, share of loss from A&JV declined by 82.4% to a loss of US$0.7 million compared with the same period last year.

Yue Yuen Industrial (Holdings) Limited

www.yueyuen.com

Jerry Shum

Investor Relations Director

Tel: [phone]

Fax: [phone]

E-mail: [e-mail]

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Consolidated Income Statement

For the three months ended March 31, 2014

2014 unaudited

3 months

2013 unaudited

3 months

US$'000 US$'000
Turnover 1,833,806 1,709,478

Cost of sales (1,414,645) (1,358,604)
Gross profit 419,161 350,874

( % of turnover ) 22.86% 20.53%

Other income 37,907 33,012
Selling and distribution expenses (151,091) (148,152)
Administrative expenses (147,569) (132,158) Other expenses (57,957) (47,872) Finance costs (4,721) (7,586)
Fair value changes on derivative financial instruments (24,182) 2,437
Fair value changes on consideration
payable for acquisition of business (210) 170
Loss on deregistration of subsidiaries (236) - Impairment loss on amounts due from joint ventures - (2,414) Share of results of associates 8,174 6,494

Share of results of joint ventures 7,462 801
Profit before taxation 86,738 55,606

Income tax (expense) credit (14,777) 73
Profit for the period 71,961 55,679

( % of turnover ) 3.92% 3.26%

Attributable to:
Owners of the Company 70,196 61,608

( % of turnover ) 3.83% 3.60%

Non-controlling interests 1,765 (5,929)

71,961 55,679

By Category:

Recurring operating Profit 94,651 60,614

( % of turnover ) 5.16% 3.55%

Non-recurring operating (loss) profit (24,455) 994

Net Profit attributable to Owners of the Company 70,19661,608

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