2

Group Financial HighlightsGroup Financial HighlightsFor the Year Ended December 31

YOY change (%)

2003 2002

Turnover (HK$M) 3,389 3,588 5.5

Gross profit (HK$M) 1,634 1,677 2.6

EBITDA (HK$M) 488 583 16.3

Operating profit (HK$M) 364 385 5.5

Profit attributable to shareholders (HK$M) 266 328 18.9

Earnings per share (HK cents) 18.5 22.8 18.9

Dividend per share - interim (HK cents)

- interim special (HK cents)

- final (HK cents)

- special (HK cents)

1.5

3.0

4.5

12.0

4.5

0.0

4.5

10.0

66.7

N.A.

-

20.0

Dividend payout ratio (%) 113.5 83.3 30.2

3

Selected Financial Highlights & RatiosSelected Financial Highlights & Ratios For the Year Ended December 31

2003 2002

Net cash & bank balances (HK$M) 784 614

Cash inflow from operating activities

(HK$M)

498 481

Inventory turnover on sales (days) 24 26

Current ratio (x) 2.5 2.8

Gearing on shareholder’s equity (x) 0.4 0.3

Gross margin (%) 48.2 46.7

Operating margin (%) 10.7 10.7

Net margin (%) 7.8 9.1

Return on average equity (%) 14.8 18.8

4

Divisional HighlightsDivisional HighlightsFor the Year Ended December 31

Division Turnover Operating Profit

(In HK$M) 2003 2002 YOY Chg (%) 2003 2002 YOY Chg

(%)

Retail And

Distribution3,221 3,375 4.6 316 320 1.3

Manufacturing 168 213 21.1 42 54 22.2

Others * - - - 6 11 45.5

Total 3,389 3,588 5.5 364 385 5.5

* Includes interest income and intra-division eliminations

5

Retail and Distribution DivisionRetail and Distribution DivisionFor the Year Ended December 31, 2003

Retail and Distribution Turnover Composition by Market

Mainland China25%

(25%)

Hong Kong22%

(23%)

Taiwan 19%

(20%)

Singapore11%

(11%)

Malaysia4%

(4%) Others14%

(14%)

Australia5%

(3%)

Note:2002’s figures in brackets

6

Retail and Distribution Division Retail and Distribution Division (Cont’d)(Cont’d)

For the Year Ended December 31, 2003

Retail and Distribution Turnover Composition by Brand

Giordano Ladies4%

(4%)

Bluestar Exchange 7%

(7%)

Giordano core line + Junior89%

(89%)

Note:2002’s figures in brackets

7

Retail and Distribution Division Retail and Distribution Division (Cont’d)(Cont’d)

Giordano Giordano core core lineline + Junior + Junior

Giordano Giordano LadiesLadies

Bluestar Bluestar ExchangeExchange

Retail Turnover Growth (YOY % Chg)

3.2 10.9 5.4

Gross Margin (Y

OY Basis Point Chg)

180 30 flat

• Total comparable store sales 9.3%

• Total comparable store gross profit 7.7%

Brand StatisticsBrand Statistics

8

Market ReviewMarket ReviewMainland China

• Sales down 5%; sales per sq. ft. fell 25%

• Adverse effects of SARS

• Warm weather dampened sales in Sept. & Oct.

• Cold temperatures resulted in sales rebound in Nov. & Dec.

• Rental in prime locations remain high

• Added 39 core line, 3 Junior, 9 Bluestar outlets * Includes directly managed outlets only

Sales

(HK$M)

Sales per

Sq. ft. (HK$)

Comp. Store Sales

Chg.*

Retail Floor

area(ft2)

No. of Outlets

No. of Sales assoc.

2003 815 3,000 13% 484,300 581 703

2002 856 4,000 - 434,800 532 633

9

• Sales down 10%; sales per sq. ft. fell 9%• Worst hit by SARS due to reliance on tourism• Tightening inventory; cutting costs; high-margin products• Profitability recovered in 2H• Higher gross margins, except Bluestar; prices reduced for larger market share

Market ReviewMarket ReviewHong Kong

Sales

(HK$M)

Sales per

Sq. ft. (HK$)

Comp. Store Sales

Chg.

Retail Floor

area(ft2)

No. of Outlets

No. of Sales assoc.

2003 697 6,200 15% 112,100 75 486

2002 776 6,800 3% 116,400 73 537

10

• Sales down 11%; sales per sq. ft. fell 10%• Momentum picked up in 2H on inventory mgmt and global product platform• Giordano Ladies major recovery after SARS• Bluestar capturing a larger market share in 4Q 03• Non-performing stores closed; better located stores added in late 4Q• Current recovery in performance sustainable

Market ReviewMarket ReviewTaiwan

Sales

(HK$M)

Sales per

Sq. ft. (HK$)

Comp. Store Sales

Chg.

Retail Floor

area(ft2)

No. of Outlets

No. of Sales assoc.

2003 604 2,600 13% 241,500 195 794

2002 677 2,900 15% 232,900 182 773

11

•Sales down 7%; sales per sq. ft. fell 14%• Iraq War and SARS led to negative consumer sentiment in 1H•Heavy industry-wide price promotions in 2H•Recent modifications to our competitive strategy should yield stronger

performance in 2004

Market ReviewMarket ReviewSingapore

Sales

(HK$M)

Sales per

Sq. ft. (HK$)

Comp. Store Sales

Chg.

Retail Floor

area(ft2)

No. of Outlets

No. of Sales assoc.

2003 348 7,700 14% 43,600 43 279

2002 372 9,000 7% 46,000 49 320

12

Market ReviewMarket Review

(in HK$M) AustraliaAustralia MalaysiaMalaysia IndonesiaIndonesia ThailandThailand JapanJapan TotalTotal

2003 149 114 90 64 28 445

2002 98 114 46 38 25 321

YOY Chg (%) 52 flat 96 68 12 39

• Accounts for 14% of total retail turnover (2002:10%)

• YOY sales and gross margins improved

• In Australia, 4 new stores were added in late 4Q; 5 new outlets planned for 2004;

and growth momentum continuing

• In Japan, shop portfolio revamped; efficiency improved by store size reduction.

Sales per sq. ft. rose 12.5%. 10 new outlets to be added in 2004.

Other MarketsOther Markets

13

• Hurt by competition and weak consumer

spending, sales fell 25% YOY• Frequent markdowns led to gross margins

decline• Occupancy costs at department stores up due to

higher commission rates• Higher occupancy costs, coupled with falling

sales productivity resulted in double-digit YOY

profits decline

Market ReviewMarket ReviewKorea

14

By the By the eend of December 31, 200nd of December 31, 20033, , ttotal of 1otal of 1363363 ooutlets utlets wworldwideorldwide

Mainland ChinaMainland China581581

Hong Kong75

JapanJapan1313

AustraliaAustralia3434

TaiwanTaiwan195195

ThailandThailand3333

MyanmarMyanmar1717

PhilippinesPhilippines4242

SingaporeSingapore4433

MalaysiaMalaysia4242

IndonesiaIndonesia3333

KoreaKorea117272

Middle EastMiddle East7575

ArubaAruba55

BruneiBrunei33

15

Number of Outlets, by Region and by BrandNumber of Outlets, by Region and by Brand (as at December 31, 2003) (as at December 31, 2003)

Total Giordano core line

Giordano Ladies

Giordano Junior*

Bluestar Exchange

Aruba 5 5 0 0 0

Australia 34 34 0 0 0

Brunei 3 3 0 0 0

Hong Kong 75 44 8 0 23

Indonesia 33 33 0 0 0

Japan 13 13 0 0 0

Korea 172 126 0 46 0

Mainland China 581 555 5 3 18

Malaysia 42 42 0 0 0

Middle East 75 75 0 0 0

Myanmar 17 17 0 0 0

Philippines 42 42 0 0 0

Singapore 43 36 0 7 0

Taiwan 195 135 8 7 45

Thailand 33 33 0 0 0

Total 1,363 1,193 21 63 86

*Includes stand-alone outlets only

16

Manufacturing DivisionManufacturing Division(5.0 % of consolidated turnover)

• Supplied 28.0% of retail division’s requirement• Turnover before elimination fell 9.7%• Sales contracted during the SARS outbreak; especially sa

les to third-party Japanese customers • Gross margins fell by 90 bps.• Industry surplus capacity led to price competition resulti

ng in lower margins• Operating profit fell 22%• New European client base

17

• Positive medium term global economic outlook• 2004 to be a year of rejuvenation & growth• Aim for higher sales & profit growth

Mainland China • Medium term earnings driver • Besides flagship store in Shanghai, nation-wide store refurbi

shments

Hong Kong• Upbeat on reviving economy; concerned about speculative f

orces may inflate property costs• Focus on enhancing brand image

OutlookOutlook

18

OutlookOutlook

Taiwan • Falling sales trend stopped• Presidential election casts uncertainty• To add 30 core line and 12 Bluestar outlets in 2004

Singapore• Wide-spread wage cuts and Goods & Services Tax Hike• Focus on service & brand differentiation; and market segme

ntation

19

OutlookOutlook

Korea • Mixed economic outlook for 2004; worst is over• Global Information platform enhances sales and inventory; cl

oser ties with other markets• Markdowns curtailed by better product cycle management• Plan to open about 20 outlets

Japan• On the right track• Operating model working and operating losses within budget• Focus on Kansai area• Projected breakeven during 2H