Ports Design Limited2008 Annual Results

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2008 Annual Results Highlights

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Turnover rose 9.8% over 2007 to RMB1.49 billion in 2008Strong performance by retail segment (sales growth of 19.8% Y.o.Y.), contributing 86.9% of group turnover

Gross Profit increased 17.9% over 2007 to RMB1.14 billion in 2008, and Gross Profit Margin increased to 76.7% (2007: 71.5%)

Profit from operations rose 20.8% over 2007 to RMB453.8 million due to greater contribution from the higher margin retail segment, and Operating Margin rose to 30.5% (2007: 27.7%)

Profit before taxation rose 21.6% over 2007 to RMB463.7 million. Net Profit rose 6.3% to RMB421.7 million from RMB396.9 million in 2007, and Net Profit Margin fell slightly to 28.3% (2007: 29.3%) due to higher tax rate

Strong financial position, with approx. RMB943.6 million in cash, cash equivalents and time deposits with banks (2007: RMB526.2 million), modest debt level and gearing ratio of 45.6% as of 31 December 2008

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Strengthened Position

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Retail margins improved to 83.7% (2007: 82.1%) achieved through ASP increase, effective retail branding strategy

In 2008, the Group embarked on a long-term strategy to develop multi-brand portfolio, added Armani and Vivienne Tam

The Group was granted an exclusive 15-year retail distribution license by Ferrari S.p.A. to operate Ferrari stores in the PRC and HK

Demonstrating ability to generate stable growth and capitalise on opportunities, maintaining

leading position amid challenging environment

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Segment Performance

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714.1851.7

1,054.9

1,355.31,488.6

0

200

400

600

800

1000

1200

1400

1600

2004 2005 2006 2007 2008

Segment turnover as a percentage of group turnover (%)

Turnover (RMB m)

Other

OEM

Retail

5.77.25.369.1Other

7.313.015.118.422.0OEM

86.979.779.575.668.8Retail

20082007200620052004

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Gross Profit

0

200

400

600

800

1000

1200

2004 2005 2006 2007 2008

(RMB m)

555.9435.4

733.6

968.6

1,142.0

Retail

76.771.569.565.361.0Group

47.455.546.746.749.7Other

16.415.418.017.216.3OEM

83.782.180.978.576.9Retail

20082007200620052004

Gross Profit Margin (%)

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Net Profit

0

100

200

300

400

500

2004 2005 2006 2007 2008

(RMB m)

420.5396.9

254.0

165.1133.5

0.750.720.460.300.25EPS (RMB)

28.229.324.119.418.7Net Profit Margin (%)

21.634.656.324.229.0Profit Before Taxation Growth (%)

20082007200620052004

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Retail Segment

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Turnover (RMB m)

0

200

400

600

800

1000

1200

1400

1600

2007 2008

+19.8%

1,080.9

1,294.3

0

200

400

600

800

1000

1200

1400

1600

2007 2008

1,083.8

887.2

+22.2%

Gross Profit (RMB m)

The 2nd half of 2008 was challenging, retail segment maintained resilient growth momentum in FY2008 across Ports and BMW Lifestyle collections

Continued stable retail store performance from both brands

ASP increased by approx. 16% for both brands

Encouraging feedback on our 1st Armani Collezioni retail store that was opened in Oct. 2008, in Xiamen

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OEM Segment

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OEM turnover decline due to recession in the developed economies, such as U.S. and the European markets

Expect similar outlook for the developed markets in FY2009

OEM GP Margin is expected to receive some positive impact via the increase of VAT rebates

OEM turnover will continue decline, however margin level is expected to remain stable

Turnover (RMB m)

0

50

100

150

200

250

2007 2008

- 38.3%

177.0

109.2

05

101520253035

2007 2008

17.9

27.3 - 34.4%

Gross Profit (RMB m)

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Other Segment

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Turnover declined by 12.7% to RMB85.1 million.

Decline in both BMW Lifestyle and Ports products

GP margin declined to 47.4% (2007: 55.5%) mainly due to the stabilisation of the Euro

Gross Profit (RMB m)Turnover (RMB m)

0

20

40

60

80

2007 2008

- 25.6%

54.1

40.3

0

20

40

60

80

100

120

2007 2008

- 12.7%

97.585.1

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Inventory

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Inventory at end of 2008 is RMB426 million, compared with RMB349 million in 2007, an increase of 21.9%

Rise in inventory turnover days from 329 days in FY2007 to 448 days in FY2008 due to the retail environment in the 2nd half of 2008, and the gearing up of new businesses for 2009

Inventory 31 Dec 2007(RMB m)

31 Dec 2008(RMB m)

% Change

Raw materials 88.3 100.1 +13.4

Work in progress 33.4 32.2 -3.6

Finished goods 226.0 292.0 +29.2

Goods in transit 1.5 1.3 -13.3

Total 349.2 425.6 + 21.9

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Other Operating Income & Expenses

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Other operating income increased by 66.6% to RMB26.0 million in 2008 due mainly to the gain on disposal of fixed assets

Operating expenses increased 17.4% from RMB608.7 million in 2007 to RMB714.3 million in 2008 due to investments for existing business, and development of new additions to our brand portfolio, eg. Vivienne Tam and Armani

Distribution expenses increased by 19.8% from RMB516.6 million in 2007 to RMB618.9 million in 2008

Administrative expenses increased modestly by 7.1% from RMB44.7 million in 2007 to RMB47.9 million in 2008

Income tax expenses increased to RMB42.0 million in 2008 from a tax credit of RMB15.5 million in 2007

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Media Recognition

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Carey Mulligan wears Ports 1961 Fait Main dress to British Academy Film Awards (BAFTA) (February 2009)

Reese Witherspoon wears Ports 1961 sheath dress from the Fall 09 collection in Berlin (March 2009)

The 2008 ‘ME Generation’ survey published by Self Magazine in Dec. 2008 and conducted by AC Nielsen, ranked Ports as one of the top five international luxury brands desired by young consumers in the PRC

Jessica Biel wears Ports 1961 in New York (October 2008)

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Advertising & Promotion

Advertising expenses accounted for 3.3% of total retail sales in 2008, down from 3.6% in 2007

Total expenditure on advertising increased by 9.0% over 2007 to RMB42.4 million

Celebrity endorsements continue to increase worldwide

Continued focus in PRC market on PR & VIP events, reflected by the Ports brand strong advertising presence in print media

Ports 1961’s ‘Great Wall’dress featured in Marie Claire, June 2008 edition

‘Esquire Runway’, China’s first ‘home-grown’fashion movie, was released in 2008, with Ports as major sponsor

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Roll-Out Of New Concept Stores

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Above left: BMW Lifestyle, The Village at Sanlitun, Beijing

Above: Ports 1961, The Shoppes at the Four Seasons, Macau

Left:The Group’s first Armani Collezioni boutique, Xiamen

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Strategic Initiatives: Ferrari

The Group was granted an exclusive 15-year retail distribution license agreement with Ferrari S.p.A to operate Ferrari stores in the PRC and HK

Management is confident that this new collaboration will bring new opportunities to the Group

Management expects that the Ferrari merchandise will appeal to the niche consumer demographic within the same high-end apparel market segment currently served by the Group

The deal, combined with the Group’s unique retailing capabilities, is expected to provide further operating leverage and economies of scale, enhancing future profitability of the Group

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2009 and Beyond

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Continue to develop core Ports franchise and move

the brand further up-marketASP increase of 6% planned

Continue to strengthen our retail distribution

platform

Enhance customer satisfaction to boost in-store

productivity

Roll-out of new business segments (Vivienne Tam,

Armani and Ferrari)Monitor performance in initial start-up phase & refine

product line/ rollout strategy as needed

Develop and expand the accessories business,

including leather bags, fragrances, and BMW

watches

Remain focused on cost control, cash generation and

selective investments in new business initiatives

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For further information please contact:

Winnie ChinHead of Investor RelationsPorts Design Limited+852-2506-0138winnie.chin@ports1961.com

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