giordano international limited (stock code: 709) september 1, 2008 2008 interim results

Giordano International Limited (stock code: 709)Giordano International Limited (stock code: 709)

September 1, 2008September 1, 2008

2008 Interim Results

September 1, 2008 Giordano 2008 Interim Results 2

Core business achieving steady growthContinuing operationsSix months ended June 30, (in HK$ millions) 2008

YOY Change

Turnover 2,342 + 11.6%

Retail & Distribution Turnover in Mainland China 803 + 34.1%

Gross profit 1,210 + 15.0%

Gross margin 51.7% + 160 bps

Operating profit 244 + 39.4%

Operating margin 10.4% + 210 bps

Profit attributable to shareholders 214 + 58.5%

Earnings per share in HK cents 14.3 + 57.1%


Solid fundamentalsContinuing and discontinuing operations combinedSix months ended June 30, (in HK$ millions) 2008 2007

Net cash & bank balances 462 474 1

Cash inflow from operating activities 201 123

Inventory turnover on sales 28 days 33 days 1

Current ratio 1.9x 1.9x 1

Profit attributable to shareholders 208 + 45.5%

Earnings per share in HK cents 13.9 + 44.8%

Return on average total assets 7.0% 5.4%

Return on average shareholders’ funds 10.8% 7.5%

1 As at December 31, 2007


Stable return to shareholders

Six months ended June 30 2008 2007

Interim dividend in HK cents 4.5 4.5

Special interim dividend in HK cents 2.0 2.0

Total interim dividend in HK cents 6.5 6.5

Earnings per share in HK cents 1 13.9 9.6

Payout ratio 46.8% 67.7%

1 Continuing and discontinuing operations combined


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-c

ash 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


Exit manufacturing to focus on retail

Six months ended June 30, 2008 (in HK$ millions)

Continuing Operations

Combined 1

Turnover 2,342 + 11.6% 2 2,560 + 10.0% 2

Gross profit 1,210 + 15.0% 2 1,256 + 12.2% 2

Gross margin 51.7% + 160 bps 2 49.1% + 100 bps2

Operating profit 244 + 39.4% 2 234 + 21.9% 2

Operating margin 10.4% + 210 bps 2 9.1% + 90 bps 2

Profit attributable to shareholders 214 + 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 operations2 Year-on-year change


Steady growth in core retail business

Six months ended June 30, (in HK$ millions) 2008YOY

Change

Turnover 2,341 + 12.1%

Operating profit 240 + 37.9%

Operating margin 10.3% + 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%


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 brandFor the six months ended June 30, 2008


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 marketFor the six months ended June 30, 2008


1H08 1H07

Turnover (HK$M) 803 599

Comp store sales + 11.8% + 20.6%

Number of outlets 859 820 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



1H08 1H07




Total turnover stable (1H07: up 2.6%)

Comp store sales increased by 3.8% (1H0

7: 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



1H08 1H07


Comp store sales + 2.2% - 3.5%


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



1H08 1H07


Comp store sales - 13.8% - 4.6%


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



1H08 1H07


Comp store sales + 2.1% - 12.0%


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.



1H08 1H07




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.



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


No. of outlets

As at June 30, 2008As at

Dec 31, 2007

YTD ChangeGiordano

& JuniorGiordano Concepts

Giordano Ladies

BSX/Bluestar Exchange Others Total

Mainland China 804 13 16 26 - 859 820 + 39

Hong Kong 45 4 10 27 - 86 92 - 6

Taiwan 151 3 10 36 - 200 210 - 10

Singapore 49 2 2 1 - 54 53 + 1

Australia 56 - - - - 56 61 - 5

Malaysia 61 1 1 - - 63 63 -

Indonesia 82 1 2 6 6 97 92 + 5

Thailand 83 - - - - 83 77 + 6

South Korea 171 - - 7 - 178 173 + 5

Middle East & India 152 - - 1 - 153 147 + 6

Philippines 42 - - 4 - 46 44 + 2

Japan 10 - - - - 10 14 - 4

Others 48 - - 1 - 49 49 -

Total 1,754 24 41 109 6 1.934 1,895 + 39

GLOBAL RETAIL NETWORK

Giordano International Limited (stock code: 709)

Q&A

2008 Interim Results

giordano international limited (stock code: 709) september 1, 2008 2008 interim results

Documents

hk cents

disposal of hk

interim results

non cash gain of hk

combined results

operations combined

total interim dividend

special interim dividend