Turnover growth was also assisted by a mild 3% increase year on year in average selling price (ASP) as the Group continued to enhance its product mix to include a higher proportion of premium-casual footwear. This improvement in ASP has helped mitigate the continuing cost increments faced by most footwear manufacturers. Net profit attributable to Group equity holders therefore increased by 53.21% to HK$35 million (2006: HK$23 million). Earnings per share was HK5.40 cents (2006: HK3.53 cents). The Group declared an interim dividend of HK1.5 cents (2006: HK1.0 cent) per share.
During the period, orders from US, EU and other customers contributed 52.43% (2006: 52.58%), 42.17% (2006: 41.90%) and 5.40% (2006: 5.52%) respectively of Group turnover. This market portfolio incorporated a steady US component which continued to contribute a stable stream of revenue despite the appreciation of the RMB, as well as a growing European segment which provided a driver of growth in turnover and an increased ASP.
The Group has also enhanced its product mix by further penetrating the higher-margin premium-casual category, which accounted for 54.40% (2006: 47%) of group turnover, while contributions from the baby and children category narrowed to 34.93% (2006: 39.36%) of the total turnover in the first half.
In the first half, the Group's major customers included Skechers, Clarks, Stride Rite, Elefanten, G-Star and Pediped, with a turnover aggregating to 98% of total turnover.
The Group will continue to solicit new customers to further expand the premium-casual segment. With a number of prospective customers now under negotiation, the Group is confident that this premium product line will be one of the major engines of future growth. Amidst prevailing market and operating uncertainties, the continual shift to higher-margin product segments is expected to deliver sustained improvement in the Group's core profitability in the future.
As a result of the Group's strategy of establishing a multi-location production base, it is able to maintain a niche geographical reach, enabling it to enjoy healthy revenue contributions from the US, as well as growth momentum of the European market. The Group will continue to augment its production centers in Southeast Asia, including Vietnam and Cambodia, to complement its China production base. The Group's core production capability now comprises a network of factories with a total of 38 production lines, of which 13 are located in Vietnam and Cambodia, 9 in Zhongshan and 16 in Zhuhai.
The performance of the Vietnam factory continues to meet management expectations, with 14.25% and 18.95% growth respectively in terms of output and value. Following successful commissioning and first phase of operations, the Group also expects further development of the Cambodian factory to better serve European customers. It is expected that by the end of 2008 a total of 3 production lines will become operational in Cambodia. The factories in Cambodia and Vietnam will continue to complement each other. As for China, there are also plans to set up plants in the interior provinces where labor and operating costs are lower. Feasibility studies are ongoing.
Mr Mickey Chen Ming-hsiung, Chairman and Managing Director, Kingmaker Footwear Holdings noted: ¡§The Group remains optimistic about future growth, which is expected to be led by demand from the European market, and from the premium-casual category. To leverage off our production strength and longstanding network of relationships in the footwear industry, we will also pursue selective opportunities in China's wholesale and retail segments. However, this will be a longer-term development plan for the Group and management will work with prudence in proceeding further downstream."
The Group's cash flow remained strong and, as at September 30, 2007, the Group had no significant borrowings and maintained a cash position of HK$308 million (2006: HK$218 million).
Financial Highlights| Six months ended September 30, | ||
| 2007 | 2006 | |
| HK$ '000 | HK$ '000 | |
| Turnover | 712,344 | 588,365 |
| Gross Profit | 84,803 | 65,188 |
| Profit from operations | 41,992 | 26,719 |
| Net profit attributable to shareholders | 35,383 | 23,095 |
| Interim dividend per share | HK1.5 cents | HK1.0 cents |
| Earnings per share - basic | HK5.40 cents | HK3.53 cents |
About Kingmaker Footwear Holdings
Kingmaker Footwear Holdings Limited (HKEx: 1170) is a premium name-brand footwear manufacturer specializing in fashion casual and baby shoes. The Group operates a multi-location production base with 38 production lines in China, Vietnam and Cambodia serviced by a staff strength and workforce of 13,000. Its branded customers include Skechers, G-Star, Pediped, 310, New York, Marc Ecko, Clarks, Stride Rite and Elefanten.