The Group achieved a significant revenue growth of 39% in its core business of knitted fabric production, which contributed HK$489,233,000 or 61% of Group consolidated turnover during the first half. Gross profit margin for this segment also improved from 23.5% of the year ended March 31, 2003 to 25.1% as a result of enhanced economies of scale and more stringent cost control.

Mr Chen Tien Tui, Managing Director of Victory City International, remarked: "The strong revenue growth of our fabric manufacturing business was in line with capacity expansion at our Xinhui factory, and a result of consistent improvements in production efficiency and quality, as well as active sales efforts to make advances into new markets."

During the period, the Group invested more than HK$150 million to establish a new yarn-dyeing facility within its Xinhui factory premises. It commenced operation in late August 2003 with a monthly production capacity of close to 4 million pounds. The new yarn-dyeing operation has helped advance the Group's competitiveness in providing comprehensive and quality services for its customers, while expediting its manufacturing process and reducing subcontracting costs. This new segment is expected to contribute to both turnover and profit growth from the second half onwards.

The garment trading business also registered a 37% increase in revenue to HK$313,630,000. The Group has been successful in clinching new orders from England, Ireland, Japan, Canada and the USA despite the impact of the SARS. It is expected that the segment's growth impetus will be sustained well into the second half.

As at September 30, 2003, the Group had total assets of HK$1,468,786,000 (March 31, 2003: HK$1,043,507,000). Subsequent to the arrangement of a HK$288-millon syndicated loan in June 2003, the Group's current ratio at the end of the reporting period was maintained at a comfortable level of 1.8 (March 31, 2003: 1.6), with gearing ratio at 53.5% (March 31, 2003: 21.0%).

"We are cautiously optimistic about the second half of this financial year as we witness signs of improvement in the worldwide economy. Our vertical set-up, from yarn-dyeing, knitted fabric manufacturing to garment sourcing and exporting, has placed us in a solid platform to facilitate active business rollouts in the future. Our master plan envisages the phased expansion of the three core business lines to enhance shareholders' value," concluded Mr Li Ming Hung, Chairman of Victory City International.

Financial Highlights

	Six months ended September 30,
	2003	2002
	HK$ '000	HK$ '000
Turnover	802,863	582,586
Profit from operating activities	91,243	59,527
Net profit attributable to shareholders	73,065	44,808
Earnings per Share
- Basic	HK14.8 cents	HK12.5 cents
- Diluted	HK14.5 cents	HK11.0 cents
Interim dividend per share	HK4.5 cents	HK3.0 cents

About Victory City
Victory City International Holdings Limited (SEHK: 539) is one of Hong Kong's major manufacturers of knitted fabric with production facilities in Xinhui City, Guangdong Province covering an area of over 7 million square feet. The Group is principally engaged in the production and sale of knitted fabric and dyed yarn, and the trading of garment products.

Issued by :
Victory City International Holdings Limited

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