Kingmaker Footwear Chairman and Managing Director Mr Chen Ming-hsiung, Mickey said: “Under the unstable environment, revenue growth continued to be underpinned by our market-driven product mix. Our resilience bears witness to a set of concrete fundamentals and continuous efficiency improvements backed by an innovative research-and-development capability and diversified multi-location production base. Momentum has been maintained not only through capacity expansion, but also through the constant pursuit of business diversification, the latest move being downstream towards the retailing sector.”

The Group continued to adjust its product mix and during the year, babies’ and children’s footwear became the major category accounting for 48.60% (2008: 40.72%) of turnover, whereas premium casual footwear and rugged products contributed 48.09% (2008: 54.46%) and 2.38% (2008: 4.82%), respectively.

The Group manages a strategic production platform with facilities in the PRC, Vietnam and Cambodia to cater for the US and European markets.

In the PRC, the Group operates a total of 26 production lines in Zhuhai, Zhongshan and Jiangxi, turning out a total of 14 million pairs of shoes annually. To serve the US market, the Group will continue to maintain and strengthen its production base in the PRC. And to maintain its comparative advantage, it has moved forward with its plan to establish facilities further inland, with the new facilities in Jiangxi Province commencing operations in the first half of 2009. Annual capacity is expected to increase by 7.89% by 2010.

The expansion of production facilities in Vietnam and Cambodia also made excellent progress, with the new facilities being designed to increase annual capacity by 16.67% by 2010. During the reporting year, total output was 5 million pairs, mainly for shipment to Europe.

Turnover contributed by the US market increased slightly to 50.37% (2008: 49.59%) despite the continuing appreciation of the RMB, whereas shipments to European countries dropped to 41.90% (2008: 44.78%) of total turnover, due to the increase in the babies’ and children’s category with lower ASP.

The Group is delighted to report that its efforts in starting new relationships with new brands were brought to fruition, bringing in new orders from Camper, K1X and Rockport. Major customers during the year included Skechers, Clarks, Stride Rite, Elefanten and G-Star, which in aggregate contributed to 94.65% of turnover.

To meet with its long-term expansion strategy, the Group acquired MOCCA in April 2008 to provide a new market-entry avenue into the retail sector. During the year, the Group developed a new house brand of babies’ products – “Fiona’s Prince”. The management believes that this unit will become one of the most substantial income streams for the Group.

Mr Chen continued to say that: “We are confident that the Group can maintain its competitiveness by moving up the value chain while adopting stringent cost-control measures. For the new retail business, we will consider expanding into the PRC market to capture opportunities in the mid- to upper-market segment. In addition to organic expansion, we are actively seeking out merger and acquisition opportunities. Overall, we have full confidence in the long-terms prospects for the Group.”

As at March 31, 2009, the Group maintained a strong financial position with cash and cash equivalents of HK$412 million (2008: HK$281 million). The current ratio was 1.98 (2008: 1.82) and the quick ratio was 1.63 (2008: 1.43).

About Kingmaker Footwear Holdings
Kingmaker Footwear Holdings Limited (HKEx: 01170) is a premium name-brand manufacturer of fashion casual, children’s and rugged footwear. The Group operates 40 production lines in China, Vietnam and Cambodia with a staff of 14,000. Its branded customers include Skechers, Clarks, Stride Rite, Elefanten, G-Star, Rockport, K1X, Ariate and Camper, etc.