Mr Chen Tien Tui, Managing Director of Victory City International, remarked: "In the first six months of fiscal 2005/06, the textile and garment industry was mired in a number of unfavourable parameters including increases in fuel and finance costs, and pressures resulting from prevailing trade disputes between China, the US and EU. We are delighted to report that, on the back of the solid foundations built through incessant investments and management efforts, the Group is able to sustain its robust growth trend by furthering its lead in the core knitted fabric and dyed yarn business."

The significant turnover growth in the first half was broad based, while tightened cost control, enhanced productivity, successful forays into niche markets, and improved quality and efficiency had contributed to the overall profit growth. Gross profit margin for the Group increased from 17.9% to 19.5% while the net profit margin was also up from 8.0% to 8.6%. It is envisaged that growth momentum will be sustained in the second half of the financial year.

During the period, knitted fabric and dyed yarn production and garment trading businesses contributed 66% and 34% respectively of group turnover.

Knitted fabric and dyed yarn production reported a 4% increase in segment turnover to HK$943 million. The garment trading business also achieved satisfactory performance with segment turnover gaining 28% to HK$479 million. The garment trading segment was able to embrace the challenges arising from global trade disputes and the abolition of garment quotas in 2005, and continued to diversify clientele and product portfolios. It is expected that this segment will drive the Group's further turnover and profit growth.

Mr Andy Li, Chairman of Victory City added: "To play a pro-active role and to further enhance our position in the worldwide textile and garment supply chain, the Group has set up garment manufacturing facilities strategically in China and other selected offshore countries within this financial year. We have great confidence that this new business segment will play a significant role in our corporate development in the coming years."

It is anticipated that the global trading environment will remain highly competitive, with raw material and fuel costs likely to maintain at high levels, the upswing in labour costs expected to persist and overall operating costs continuing to rise. "The Group will maintain its vigilance in order to address these issues. Looking ahead, we will strive to sustain profitability, bearing in mind our commitment of bringing high returns to our shareholders," said Mr Chen.

Financial Highlights

	Six months ended September 30,
	2005	2004
	HK$ '000	HK$ '000
Turnover	1,421,345	1,284,432
Profit from operating activities	160,314	126,163
Net profit attributable to shareholders	122,390	103,131
Earnings per Share
- Basic	HK21.6 cents	HK18.5 cents
- Diluted	HK21.6 cents	HK18.2 cents
Interim dividend per share	HK6.5 cents	HK5.5 cents

About Victory City
Victory City International Holdings Limited (HKEx: 539) is one of Hong Kong's major manufacturers of knitted fabric with an approximately 10-million-square-ft production facilities in Xinhui City, Guangdong Province. The Group's principal operations include production and sale of knitted fabric and dyed yarn, and manufacturing and trading of garment products.

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Victory City International Holdings Limited

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