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Incorporated in Bermuda with limited liability Stock Code: 494

Announcement of Results for the Half Year Ended 30 June 2017

  • Li & Fung's new supply chain model gains traction

  • Customers embrace new supply chain solutions

  • Core operating profit increases by 12% in 1H 2017 like-for-like

  • Logistics continues double-digit growth driven by e-logistics, geographic expansion and new verticals

  • Strong balance sheet supports future growth, including US$150 million for digitalization over the next three years

HIGHLIGHTS

Like-for-like

Reported

Excluding the Asia consumer and healthcare distribution business1

(US$ million)

1H17

1H16

Change

1H17

1H16

Change

(Restated)2

(Restated)2

Turnover

7,264

7,418

(2.1%)

7,264

7,984

(9.0%)

Total Margin

835

848

(1.6%)

835

935

(10.7%)

As % of Turnover

11.5%

11.4%

11.5%

11.7%

Core Operating Profit

170

152

+11.9%

170

156

+8.7%

As % of Turnover

2.3%

2.0%

2.3%

2.0%

Write-back of Acquisition Payable

30

-

30

-

Profit Attributable to Shareholders

101

67

+51.3%

101

72

+39.6%

Earnings per Share - Basic (HK cents)

9.4

6.2

9.4

6.7

(equivalent to) (US cents)

1.21

0.80

1.21

0.87

Adjusted Profit Attributable to Shareholders3

91

86

+6.1%

91

92

(0.7%)

Adjusted Earnings Per Share

- Basic3 (HK cents)

8.5

8.0

8.5

8.5

(equivalent to) (US cents)

1.09

1.03

1.09

1.10

Dividend per Share (HK cents)

11

11

  1. Excluding the Asia consumer and healthcare distribution business, which was strategically divested in June 2016

  2. 2016 comparatives restated with adoption of New Accounting Standard HKFRS 15 (Note 1 of the condensed interim financial information)

  3. Excluding non-cash M&A items (write-back of acquisition payable, amortization of other intangible assets and non-cash interest expenses)

MANAGEMENT DISCUSSION AND ANALYSIS Results Overview First-half 2017 Performance

The first half of 2017 was the first execution period of our new Three-Year Plan (2017- 2019). At the core of this plan is our goal to build the supply chain of the future, and we are pleased with the progress we have made. As the retail industry continues to transform at unprecedented speed, our customers require shorter lead time, smaller order quantities and greater flexibility in procuring their products. We are embracing these changes with a better speed-to-market business model, innovative products and digitalized services that help our customers stay competitive and successfully navigate the digital economy.

Group Business Structure

Our newly organized Services segment, comprising the Supply Chain Solutions and Logistics businesses, offers customers end-to-end supply chain services. During the first half of 2017, the segment generated encouraging results. While our turnover faces pressure from the ongoing destocking trend and promotional activities among our brand and retail customers, we have seen early signs of stabilization due to our enhanced service offerings. Our new supply chain model has gained traction with customers who are embracing our transformational supply chain solutions featuring speed, innovation, and digitalization. Our Logistics business continued to maintain strong momentum in organic growth, largely driven by e-logistics services and deeper penetration of our core customers.

Each of our product verticals, grouped under our new Products segment, was operated by a distinct management team with greater autonomy to facilitate quicker decisions. Despite customers' more conservative buying programs in this uncertain retail environment, we continued to expand our product portfolios with innovative products to capture higher market share and enhance margins. In particular, our furniture vertical enjoyed continued solid margin improvement during the first half of 2017. Our sweater vertical also

announced a joint venture with South Ocean Knitters Holdings Limited, combining the resources of both entities to become one of the largest, and most innovative knitwear suppliers globally.

Operating with higher productivity, better efficiency and strategic cost control, we managed to grow our profit margin percentage and profitability in a tough operating environment. We will continue to drive productivity with process improvements under a digitalized sourcing platform. In addition to our operational efforts, we also made good progress on our new strategic initiatives. Our global business development team has been formed to accelerate the pace of new customer wins, our data analytics team is generating valuable strategic insights from our proprietary data, and our corporate development team is leveraging our convening power to bring together diverse players from across the supply chain to create an ecosystem that benefits all stakeholders. Meanwhile, our strong balance sheet including the US$1.0 billion raised in 2016 via the strategic divestment of our Asia consumer healthcare and distribution business as well as the issuance of fixed-for-life perpetual bonds has provided us with maximum flexibility in our capital structure to fund future growth, including the US$150 million for digitalization over the next three years.

Effective execution is our principal focus. Between now and the end of our Three-Year Plan we will diligently execute our priorities under core themes of speed, innovation and digitalization to create the supply chain of the future.

YoY$

Group Geographical Market Turnover

US$m

1H 2017 1H 2016

7,264 7,418 *

65% USA 66%

19% Europe 18%

10% Asia 9%

6% Rest of 7%

World

YOY % * (3.7%) +6.0% +1.9% (12.1%)

US$b 4.7

1.4

0.7 0.5

USA Europe Asia Rest of

World

YOY % (3.7%) +6.0% (44.2%) (12.1%)

* Excluding the Asia consumer and healthcare distribution business, which was strategically divested in June 2016

Results

Like-for-like

Reported

Excluding the Asia consumer and healthcare distribution business1

1H17

1H16

Change

1H17

1H16

Change

US$m

US$m

%

US$m

US$m

%

(Restated)2

(Restated)2

Turnover

7,264

7,418

(2.1%)

7,264

7,984

(9.0%)

Total Margin

835

848

(1.6%)

835

935

(10.7%)

As % of Turnover

11.5%

11.4%

11.5%

11.7%

Operating Costs

665

696

(4.5%)

665

779

(14.7%)

As % of Turnover

9.2%

9.4%

9.2%

9.8%

Core Operating Profit

170

152

+11.9%

170

156

+8.7%

As % of Turnover

2.3%

2.0%

2.3%

2.0%

Profit Attributable to Shareholders

101

67

+51.3%

101

72

+39.6%

Adjusted Profit Attributable to Shareholders3

91

86

+6.1%

91

92

(0.7%)

  1. Excluding the Asia consumer and healthcare distribution business, which was strategically divested in June 2016

  2. 2016 comparatives restated with adoption of New Accounting Standard HKFRS 15 (Note 1 of the condensed interim financial information)

  3. Excluding non-cash M&A items (write-back of acquisition payable, amortization of other intangible assets and non-cash interest expenses)

Group Product Mix (Excluding Logistics)

Soft Goods

32%

Hard Goods

68% Turnover

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Distributed by Public, unedited and unaltered, on 24 August 2017 08:47:06 UTC.

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