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Giordano International Limited (stock code: 709) September 1, 2008 2008 Interim Results.

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Presentation on theme: "Giordano International Limited (stock code: 709) September 1, 2008 2008 Interim Results."— Presentation transcript:

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2 Giordano International Limited (stock code: 709) September 1, 2008 2008 Interim Results

3 September 1, 2008Giordano 2008 Interim Results 2 Core business achieving steady growth Continuing operations Six months ended June 30, (in HK$ millions) 2008 YOY Change Turnover2,342+ 11.6% Retail & Distribution Turnover in Mainland China803+ 34.1% Gross profit1,210+ 15.0% Gross margin51.7%+ 160 bps Operating profit244+ 39.4% Operating margin10.4%+ 210 bps Profit attributable to shareholders214+ 58.5% Earnings per share in HK cents 14.3+ 57.1%

4 September 1, 2008Giordano 2008 Interim Results 3 Solid fundamentals Continuing and discontinuing operations combined Six months ended June 30, (in HK$ millions) 20082007 Net cash & bank balances462474 1 Cash inflow from operating activities201123 Inventory turnover on sales28 days33 days 1 Current ratio1.9x1.9x 1 Profit attributable to shareholders208+ 45.5% Earnings per share in HK cents 13.9+ 44.8% Return on average total assets7.0%5.4% Return on average shareholders’ funds10.8%7.5% 1 As at December 31, 2007

5 September 1, 2008Giordano 2008 Interim Results 4 Stable return to shareholders Six months ended June 30 20082007 Interim dividend in HK cents 4.5 Special interim dividend in HK cents 2.0 Total interim dividend in HK cents 6.5 Earnings per share in HK cents 1 13.99.6 Payout ratio46.8%67.7% 1 Continuing and discontinuing operations combined

6 September 1, 2008Giordano 2008 Interim Results 5 Exit manufacturing to focus on retail Completed divestiture of remaining 51% shareholding in primary manufacturing subsidiary in August 2008 –Sale of 21% shareholding for HK$22.9 million –Conversion of balance 30% shareholding into non-voting preferred shares with guaranteed annual dividend of HK$2.6 million –Call option at HK$32.7 million exercisable within 5 years and put option at HK$27.8 million exercisable after 2 years –Expected to record a gain of HK$14.7 million on sale of its 21% interest and a non- cash gain of HK$16.1 million from the conversion of the remaining 30% interest into preferred shares –Residual manufacturing operations to be consolidated Reduced shareholding in Dongguan garment manufacturing JV from 49% to 9.9% in June 2008 –Recorded a one-time gain on disposal of HK$17 million

7 September 1, 2008Giordano 2008 Interim Results 6 Exit manufacturing to focus on retail Six months ended June 30, 2008 (in HK$ millions) Continuing Operations Combined 1 Turnover2,342+ 11.6% 2 2,560+ 10.0% 2 Gross profit1,210+ 15.0% 2 1,256+ 12.2% 2 Gross margin51.7%+ 160 bps 2 49.1%+ 100 bps 2 Operating profit244+ 39.4% 2 234+ 21.9% 2 Operating margin10.4%+ 210 bps 2 9.1%+ 90 bps 2 Profit attributable to shareholders214+ 58.5% 2 208+ 45.5% 2 Earnings per share in HK cents 14.3+ 57.1% 2 13.9+ 44.8% 2 1 Combined results including both continuing and discontinuing operations 2 Year-on-year change

8 September 1, 2008Giordano 2008 Interim Results 7 Steady growth in core retail business Six months ended June 30, (in HK$ millions) 2008 YOY Change Turnover2,341+ 12.1% Operating profit240+ 37.9% Operating margin10.3%+ 200 bps Better performance reflects consumer acceptance of our branding efforts 1H08 gross margin increased by 130 basis points 1H08 gross profit increased by 15.0% YOY Comparable store sales increased by 0.8%

9 September 1, 2008Giordano 2008 Interim Results 8 Giordano & Giordano Junior 85% of 1H08 turnover (1H07: 84%) Turnover up 13.3% Comp store sales up 0.1% Gross margin up 140 basis pts Added 31 outlets in 1H08 BSX / Bluestar Exchange 5% of 1H08 turnover (1H07: 7%) Turnover down 19.6% Comp store sales up 4.2% Net reduction of 8 outlets Giordano Concepts 5% of 1H08 turnover (1H07: 4%) Turnover up 31.7% Comp store sales down 0.1% Added 10 stores in 1H08 Giordano Ladies 5% of 1H08 turnover (1H07: 5%) Turnover up 13.3% Comp store sales up 5.8% Gross margin up 80 basis pts Added 2 stores in 1H08 Retail & Distribution turnover by brand For the six months ended June 30, 2008

10 September 1, 2008Giordano 2008 Interim Results 9 Mainland China 34% of 1H08 turnover (1H07: 29%) Turnover up 34.1% in 1H08 859 out of 1,934 stores worldwide Hong Kong, 18% (21%) 1 Taiwan, 14% (15%) 1 Singapore, 8% (9%) 1 Australia, 5% (6%) 1 Indonesia, 4% (4%) 1 Malaysia, 3% (3%) 1 Thailand, 3% (3%) 1 Others, 11% (10%) 1 1 YOY figures in brackets Retail & Distribution turnover by market For the six months ended June 30, 2008

11 September 1, 2008Giordano 2008 Interim Results 10 1H081H07 Turnover (HK$M) 803599 Comp store sales + 11.8%+ 20.6% Number of outlets 859820 1 Eight consecutive quarters of double-digit turnover growth since 3Q06 Turnover increased by 34.1% (1H07: up 26.9%) Comp store sales increased by 11.8% (1H07: up 20.6%) ASP up 23.1% in RMB terms and gross margin expanded by 270 basis pts from improved merchandise mix 39 stores added in 1H08 MAINLAND CHINA China focus yielding strong results 1 As at December 31, 2007

12 September 1, 2008Giordano 2008 Interim Results 11 1H081H07 Turnover (HK$M) 431 Comp store sales + 3.8%+ 7.8% Number of outlets 8692 1 Total turnover stable (1H07: up 2.6%) Comp store sales increased by 3.8% (1H07: up 7.8%) ASP up 23.8% and gross margin expanded by 340 basis pts from improved merchandise mix Turnover of Giordano brands (Giordano, Junior, Ladies and Concepts) up 6.0% and comp store sales up 3.5% HONG KONG Stable performance in a challenging market 1 As at December 31, 2007

13 September 1, 2008Giordano 2008 Interim Results 12 1H081H07 Turnover (HK$M) 335320 Comp store sales + 2.2%- 3.5% Number of outlets 200210 1 Turnover increased by 4.7% (1H07: down 0.6%) Comp store sales increased by 2.2% (1H07: down 3.5%) due to improved merchandising and marketing TAIWAN Re-engineering efforts gaining traction 1 As at December 31, 2007

14 September 1, 2008Giordano 2008 Interim Results 13 1H081H07 Turnover (HK$M) 189200 Comp store sales - 13.8%- 4.6% Number of outlets 5453 1 Turnover down 5.5% in 1H08 (1H07: up 5.3%) Experienced Hong Kong management team brought in to reorganize operations SINGAPORE Reorganizing to improve operations 1 As at December 31, 2007

15 September 1, 2008Giordano 2008 Interim Results 14 1H081H07 Turnover (HK$M) 452441 Comp store sales + 2.1%- 12.0% Number of outlets 178173 1 Turnover increased by 2.5% (1H07: down 7.0%) Comp store sales increased by 2.1% (1H07: down 12.0%) Gross margin increased by 50 basis pts Gross profit increased by 3.5% Five stores added in 1H08 SOUTH KOREA Turnaround on track Note: South Korea sales are not consolidated into Group sales. On June 30, 2008, the Group held 48.8% in Giordano South Korea. 1 As at December 31, 2007

16 September 1, 2008Giordano 2008 Interim Results 15 1H081H07 Turnover (HK$M) 247202 Comp store sales + 17.0%+ 2.4% Number of outlets 153147 1 Turnover grew by 22.3% (1H07: up 17.4%) Comp store sales increased by 17.0% (1H07: up 2.4%) Six stores added in 1H08 MIDDLE EAST Continued expansion in a buoyant market Note: Middle East sales are not consolidated into Group sales. On June 30, 2008, the Group held 20.0% in Giordano Middle East. 1 As at December 31, 2007

17 September 1, 2008Giordano 2008 Interim Results 16 Outlook Continue to focus on driving rapid growth in Mainland China –New flagship stores opened in Hangzhou and Wuhan in August –Additional flagship stores to be opened in Beijing, Guangzhou and Chengdu –Increase advertising and promotion efforts –Sales grew by double-digit in July and August –Target to maintain double-digit turnover growth in 2H08 Intensify brand building efforts to drive ASP and gross margin increases in all markets Reinforce turnaround efforts in Taiwan, Singapore and South Korea

18 September 1, 2008Giordano 2008 Interim Results 17 No. of outlets As at June 30, 2008 As at Dec 31, 2007 YTD Change Giordano & Junior Giordano Concepts Giordano Ladies BSX/Bluestar Exchange OthersTotal Mainland China804131626-859820+ 39 Hong Kong4541027-8692- 6 Taiwan15131036-200210- 10 Singapore49221-5453+ 1 Australia56---- 61- 5 Malaysia6111--63 - Indonesia8212669792+ 5 Thailand83---- 77+ 6 South Korea171--7-178173+ 5 Middle East & India152--1-153147+ 6 Philippines42--4-4644+ 2 Japan10---- 14- 4 Others48--1-49 - Total1,754244110961.9341,895+ 39 GLOBAL RETAIL NETWORK

19 Giordano International Limited (stock code: 709) Q&A 2008 Interim Results


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