Yue Yuen Industrial : Announces Audited Results For The Year 2013

PRESS RELEASE

Yue Yuen Announces Audited Results For The Year 2013

! Due to the change of financial year end from September to December in fiscal year 2012, comparisons in this document are the audited figures for the year ended 31st December 2013, against the pro forma figures for the 12 month period ended 31st December 2012.

! The pro forma figures have not been audited. They are derived by subtracting the unaudited figures for the 3 months ended 31st December 2011, from the audited figures for the 15 months ended 31st December 2012. Both figures have previously been reported to the public.

! Management feels that the corresponding period comparison is useful. The official announcement lists the audited 12 months 2013 against the audited 15 months 2012 in accordance with the listing rules.

! Turnover up 4.1% to US$7.58 billion for the year ended 31st December 2013, compared to US$

7.28 billion in the pro forma 12 months ended 31st December 2012.

! Recurring operating profit attributable to Owners of the Company declined by 2.4% to US$430.8

million in 2013, compared to US$441.5 million in the same period last year.

! Non-­‐recurring operating profit for the period amounted to US$3.9 million.

! Total net profit attributable to Owners of the Company amounted to US$434.8 million in 2013,

down 7.1% compared to US$467.9 million in the same period last year.

(Hong Kong, 27 March 2014) - Yue Yuen Industrial (Holdings) Limited ("the Group", stock code: 00551) today announced its audited consolidated results for the year ended 31st December 2013. The prior fiscal period covered the fifteen months from 1stOctober 2011 to 31stDecember 2012.

Total turnover of the Group rose 4.1% for the period to approximately US$7,582.5 million. Recurring operating profit amounted to US$430.8 million. The Group also had non-­‐recurring operating profit of US$3.9 million for the period. Please refer to the section Financial Highlights and Business Review in the Company's announcement that provides more details of the items that give rise to non-­‐recurring operating profit. When aggregating both categories of profit, the net profit attributable to Owners of the Company for the fiscal year 2013 amounted to approximately US$434.8 million.

The Board is pleased to propose a final dividend of HK$0.75 per share. Combined with the interim dividends declared earlier, the total dividends paid per share for fiscal year 2013 amounted to HK$1.10, compared to HK$ 1.25 for the fifteen months period ended 31st December 2012.

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Business Review Total Turnover by Product Category

(audited versus pro forma) 2013

12 months

2012

Pro forma 12 months

(all figures rounded to millions )
	US$ millions	%	US$ millions	%	%change
Athletic Shoes	3,813.3	50.3	3,711.3	51.0	2.7
Casual/Outdoor Shoes	1,356.8	17.9	1,237.3	17.0	9.7
Sports Sandals	86.2	1.1	89.7	1.2	(3.9)
Retail Turnover	1,726.6	22.8	1,659.5	22.8	4.0
Soles, Components & Others	599.6	7.9	582.8	8.0	2.9
Total Turnover	7,582.5	100.0	7,280.6	100.0	4.1

Turnover of athletic shoes and casual/outdoor shoes were up by 2.7% and 9.7% respectively year over year. Total shoe manufacturing volume was up by 1.1% to 313.4 million pairs for the twelve month period.

With regards to the retail and wholesale business of sportswear in the Greater China region, turnover increased by 4.0% to US$1,726.6 million in 2013 compared to US$1,659.5 million recorded in the same period last year.

Gross Profit

During the period, the Group's gross profit declined by 0.8% to US$1,646.6 million. When looking at the underlying business units, gross profit for the manufacturing operations involving international performance brands contracted due to rising wage costs as well as the reduction in operating efficiency due to the relocation and allocation of production capacity. When viewed by each quarter, during the twelve month period manufacturing operations exhibited a trend of improving gross margin. Pou Sheng had a gross profit decline of

0.7% to US$513.8 million mainly due to the significant deterioration in the manufacturing sales to the domestic brands and the discounting activities in retail operations to drive sales volumes.

Selling & distribution expenses and Administrative expenses

For the Group, the sum of Selling & distribution expenses and Administrative expenses was almost unchanged compared to the same period last year. For the manufacturing operations, the sum of these items increased by

4.8% partly due to increased personnel expenses compared to the same period last year, whereas for Pou Sheng the sum of these items declined by 3.8% when compared with the same period last year due to cost control measures. Since the underlying inflation in both industries is significant, managements in both of the business units have been working hard to control expenses.

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

At the Group level, Share of A&JV declined by 44.0% to US$48.8 million. For the manufacturing operations, Share of A&JV fell partly due to the recognition of a one-­‐time loss of US$23.2 million due to the change of shareholding in Symphony Holdings Limited. For Pou Sheng, share of loss from A&JV declined by 47.8% to a loss of US$5.9 million compared with a loss of US$11.4 million in the same period last year.

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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 twelve months ended 31st December, 2013

2013 (audited)

12 months

2012 (Pro forma)

12 months

US$'000 US$'000
Turnover 7,582,471 7,280,610

Cost of sales (5,935,840) (5,620,571) Gross profit 1,646,631 1,660,039

( % of turnover ) 21.72% 22.80%

Other income 170,952 149,655
Selling and distribution expenses (623,917) (633,772) Administrative expenses (563,475) (538,098) Other expenses (208,370) (186,701) Finance costs (24,483) (36,313)
Fair value changes on derivative financial instruments 7,978 (14,636) Fair value changes on consideration
payable for acquisition of business (43) (2,085) Fair value changes on investment properties 1,387 390
Gain on disposal of subsidiaries 28,452 5,761
Impairment loss on Plant, Property & Equipment (5,640) -­‐
Impairment loss on investments in an associate and joint ventures
(585) (9,345)
Impairment loss on amounts due for joint ventures (8,345) -­‐
Impairment loss on consideration receivable for disposal of properties
(4,061) -­‐

Impairment loss on intangible assets	(11,025)	(8,485)
Impairment loss on loan to an associate	-­‐	(1,366)
Share of results of associates	42,812	45,439
Share of results of joint ventures	5,951	41,662

Profit before taxation 454,219 472,145

Income tax expense (25,232)(22,614)

Profit for the year/period 428,987 449,531

( % of turnover ) 5.66% 6.17%

Attributable to:
Owners of the Company 434,768 467,870

( % of turnover ) 5.73% 6.43%

Non-­‐controlling interests (5,781) (18,339)

428,987 449,531

By Category:

Recurring operating Profit 430,823 441,503

( % of turnover ) 5.68% 6.06% Non-­‐recurring operating profit/(loss) 3,945 26,367

Net Profit attributable to Owners of the Company 434,768467,870

Earnings per share

-­‐ Basic US26.37centsUS28.37cents

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