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2010 Annual Results Announcement

March 2011

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Disclaimer

Cautionary note regarding forward-looking statements

This presentation material contains certain forward-looking statements with respect to the financial

condition, results of operations and business of the Company. These forward-looking statements

represent the Company’s expectations or beliefs concerning future events and involve known and

unknown risks and uncertainty that could cause actual results, performance or events to differ

materially from those expressed or implied in such statements. Certain statements, such as those

that include the words “potential”, “estimated”, “expect”, “anticipates”, “objective”, “intends”, “plans”,

“believes”, “estimates”, and similar expressions or variations on such expressions may be considered

“forward-looking statements”. Forward-looking statements involve inherent risks and uncertainties.

Readers should be cautioned that a number of factors could cause actual results to differ in some

instances materially, from those anticipated or implied in any forward-looking statement. Forward-

looking statements speak only as of the date they are made, and it should not be assumed that they

have been reviewed or updated in the light of new information or future events. Trends and factors

that are expected to affect the Company’s results of operations are described in the “Business

Review and Financial Review”.

Agenda

Business Review

Strategies & Future Plans

Open Forum

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Annual Results Overview

Financial Review

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Annual Results Overview

Financial Achievement

Sales +7.3%

Gross profit +6.1%

Operating profit +2.6%

High dividend payout ratio

Dividend payout ratio: 70%

New management on Board

Increasing marketing and advertising activities

Tightening partnership with retailers

Product innovation through design and development

Leveraged talents and resources from R&D center in Japan

Transformed Taicang factory, Jiangsu into a technical center

Additions of professionals with international exposure

Chief Executive Officer - Ms. Sandrine Zerbib

Chief Financial Officer - Mr. Terence Hon

Annual Results Overview

Launched a series of Kappa brand image TV commercials on

CCTV5 and other regional TV channels

Launched a World Cup marketing campaign dubbed “Soccer

Frenzy” during 2010 FIFA World Cup South Africa

Leveraging the partnership with GX Retail Group, enhanced

the brand experience at point of sale

Increased emphasis on internet sales

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Business Review

Business Review

Brand Building

Expanding Brand Portfolio

Sales Network

Design and Development

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Brand Building — Kappa TVCs Launched

Launched Kappa brand image TV commercials that featured the sports in season on CCTV 5, Anhui TV, Zhejiang TV, Liaoning TV, etc. between May and October 2010

Adopted the theme of fusion between sports and fashion

TVC Launched Kappa TVC in CCTV 5

during World Cup period

Online video Soft online marketing to

demonstrate Kappa’s spirit of combining sports and fashion

Art show Creative artwork displayed in Wangfujing and Solana,

Beijing Celebrity Campaign Sponsored “DreamBoat Soccer Team” and invited them to attend the 2010

World Cup in South Africa

Brand Building — FIFA World Cup South Africa 2010 Promotion Activities

Joint promotion Kappa x Bazaar Crossover

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Online ad Attract young

consumers

Brand Building — China Open

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Platinum Sponsor of the China Open, a top

integrated tennis event held by ATP, WTA and ITF

Further promoted Kappa brand by extending its

promotional activities for the China Open to retail

stores

Title sponsor of the event “Kappa-CRT” with the

goal of promoting tennis to the public

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“Hole in One Kappa” golf day was organized in

August 2010 featuring different celebrities in golf

games. A product launch show for the Kappa

Golf series was organized

Kappa also offered full support to the HSBC Golf

Championship, which was held in Shanghai,

China in November 2010

Brand Building — 2010 Kappa Golf

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Brand Building — Sports Marketing

Co-sponsorship of Italian Serie A club AS Roma

Co-sponsorship of German Bundesliga Club

Borussia Dortmund

Official Sponsorship of team clothing for

Virgin Racing F1 Team

Sports Sponsorships with BasicNet and Brand Licensees

Cooperated with Bazaar Magazine to create a new graphic fashion image, a fusion between fashion and sports

Shown on “Bazaar” and “Bazaar Men’s Style” issues between June and October

Joint hands with Bazaar to launch the “Soccer Frenzy” carnival with the presence of “DreamBoat Soccer Team”

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Brand Building — Crossover with Bazaar and BMW

Kappa is the official clothing sponsor

for “BMW Mission 3”

The alliance with a world-class, high-

end brand significantly enhanced

Kappa’s brand image.

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Internet Marketing

Took full advantage of the internet platform to publicise Kappa brand through online video

series, advertisement on the SNS public homepage and dissemination through 163 mailbox

signatures , etc

Online video

Advertisement on SNS

Interactive platform for Kappa Fans

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Expanding Brand Portfolio

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Expanding Brand Portfolio — Robe Di Kappa (“RDK”)

Robe Di Kappa brings a new attitude and perspective towards sports and leisure to the world

– the inner beauty of sports with its artistically innovative line of products

First outlet was officially opened in Beijing in February 2010

A series of marketing activities were

launched, e.g. 2010 Fall/Winter Fashion

Collection, introduction of a special

selection of CD, “The Choice of RDK”

The number of outlets had grown to 20

as of end-2010

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Expanding Brand Portfolio — Phenix

Japanese outdoor and ski brand with

strong international recognition

Engaged in the active preparation of

the introduction to China market in

2011

Expanded into the outdoor segment

which is to mitigate the effects of the

high seasonality of ski and is highly

suitable for the efforts to develop in

the China market

As of 31 December 2010

As of 31 December 2009

Change

No. of Kappa stores 3,751 3,511 +240

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<25 Retail stores

25 to 50 Retail stores

50 to 100 Retail stores

>100 Retail stores

JV with GX Retail Group

Region Net

Open

Northern 145

Central 35

Southern 59

Net Openings by Region

Fujian (157)

Tianjin (76)

Taiwan Guangxi (51)

Guizhou (65)

Hunan (137)

Jiangxi (77)

Anhui (171)

Sichuan (205)

Shandong (236)

Hebei (198)

Shanxi (75)

Gansu (25)

Ningxia

(11)

Inner Mongolia (72)

Jilin (118)

Qinghai (10)

Xinjiang (48)

Tibet (7)

Hainan (29)

Shaanxi (71)

Chongqing (80)

Macao

(4)

Guangdong (294)

Beijing

(149)

Yunnan (96)

Liaoning (209)

Jiangsu (237)

Zhejiang (323)

Shanghai

(82) Hubei (161)

Henan (118)

Heilongjiang (159)

Sales Network — Kappa Stores in China

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Sales Network — Online Sales

Online sales of Kappa products grew by

over 300% in 2010

With joint efforts with www.taobao.com,

daily internet sales reached RMB11.0

million with the number of visitors to

Kappa Taobao online store hitting 1.5

million on 11 November, 2010

Aim to establish an integrated online sales

platform while at the same time tapping

into multiple popular internet channels to

promote sales

To reinforce the image of Kappa brand,

Kappa Web Visual Identity was established

to standardize the logo and webpage

layout.

Design and Development — R&D

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Evolution of Taicang factory (Jiangsu) into a technical centre which works in close cooperation with Dongxiang technical centre in Niigata, Japan

Phenix developed several new product lines and a number of new technologies during the year, including curve zippers and embossment patterns

Herring-bone Stitch Curve zippers

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Design and Development — Kappa P-A.C

Cooperated with Michael Michalsky, a renowned German

designer, and launched Kappa P-A.C in July 2010

Originated from the “Pack Away Concept” which caters to

the needs of the urban youth who are fond of carrying

various portable gadgets for convenient use at anytime

A simple and fashionable design that harmonizes with

light and soft materials

The P-A.C collection was promoted through an exhibition

tour across major cities in China including Shanghai,

Chengdu and Beijing in August and September, 2010

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Financial Review

Financial Review

Results Highlights

Sales by Markets and Brands

Sales Breakdown by Products

Gross Profit Margin by Markets and Products

Expenses Ratio to Sales

Working Capital Management

Financial Position

Return to Shareholders

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Results Highlights

2010 2009 Change

For the year ended 31 December

(RMB mn) (RMB mn) (%)

Sales 4,262 3,970 +7.3

Gross profit 2,546 2,399 +6.1

Operating profit 1,741 1,697 +2.6

Profit attributable to equity holders 1,464 1,460 +0.3

Gross profit margin (%) 59.7% 60.4% -0.7pt

Operating profit margin (%) 40.9% 42.7% -1.8pts

Net profit margin (%) 34.3% 36.8% -2.5pts

(RMB cents) (RMB cents)

Basic earnings per share 25.83 25.76 +0.3

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Sales by Markets and Brands

2010 2009 Change

For the year ended 31 December

(RMB mn) As a % of total sales

(RMB mn) As a % of total sales

(%)

China 3,650 85.6% 3,403 85.7% +7.3

– Kappa brand 3,633 85.2% 3,394 85.5% +7.0

– RDK brand 7.6 0.2% - - -

– Others 9.8 0.2% 8.8 0.2% +11.4

Japan

– Phenix, Kappa and other brands

612 14.4% 567 14.3% +7.8

Total sales 4,262 100.0% 3,970 100.0% +7.3

Recorded sales growth in all markets and all brands

Online sales increased more than 3 times from 2009, though started with lower base

RDK brand first launched in China in February 2010

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Kappa Brand in China Market – Sales Breakdown by Products

Accessories

3.4%(4.0%)

Apparel

74.8%(75.9%)

Footwear

21.8%(20.1%)

790.9133.9

123.5

2,718.12,577.6

682.8

2009 2010

5.5%

15.8%

7.7%

3,394.3 3,632.5

2010

Apparel

Footwear

Accessories

RMB mn

For the year ended 31 December Remarks: Comparable figures for 2009 are shown in brackets

[ -] An increase by 14.2% in sales volume of apparel was partly offset by higher rebates given to distributors, resulting in an overall 5.5% growth.

Double digit growth rate of footwear was mainly due to improvement in design and technological knowhow, resulting in 2.8% higher ASP and 20.1% higher sales volume. Proportion of footwear sales increased to 21.8% (2009: 20.1%).

Gross Profit Margin by Markets and Products

2010 2009 Change

For the year ended 31 December

(%) (%) (% pt)

China 62.4 63.0 -0.6

– Kappa brand 62.4 63.1 -0.7

– RDK Brand 68.0 N/A N/A

– Others 44.9 24.5 +20.4

Japan 43.9 45.2 -1.3

The Group overall 59.7 60.4 -0.7

Gross profit of Kappa products decreased mainly due to higher production cost and higher discount rate offered to customers as well as impacted by a stock return provision of RMB 155M

RDK has become the product with the highest gross profit margin within our brand portfolio

Overall gross profit margin, declined by 0.7%pt 27

2010 2009 Change

For the year ended 31 December

(%) (%) (% pt)

Apparel 64.4 65.3 -0.9

Footwear 55.4 54.5 +0.9

Accessories 64.8 63.9 +0.9

Overall 62.4 63.1 -0.7

China - Kappa brand

2010 2009 Change

For the year ended 31 December

(%) (%) (% pt)

– A&P expenses (% of sales)

9.3 7.4 +1.9

– Staff cost (% of sales)

4.6 4.6 -

– Product R&D cost (% of sales)

2.8 2.3 +0.5

Expenses ratios to sales

Increased advertising and sponsorship expenses on World Cup campaign, TV commercials, China Open, and Norway Olympics Committee

Higher R&D cost: increasing leverage on design capability in Japan and closer collaboration with University of the Arts of London

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China Market – Working Capital Management

4544

2009 2010

Inventory Turnover Day

For the year ended 31 December

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2009 2010

Day

For the year ended 31 December

6561

2009 2010

Day

For the year ended 31 December

Considering the operation pressure of

distributors, relaxed credit terms

were given to major distributors.

Despite higher A/R turnover days, the

ageing profile has been improved

No material changes of other working

capital indicators

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A/R Turnover A/P Turnover

As at 31 December 2010

As at 31 December 2009

% %

Current 75 63

1 - 30 days 21 31

31 - 120 days 4 6

Total 100 100

A/R Ageing Profile

2010 2009

For the year ended 31 December

(RMB mn) (RMB mn)

Net cash generated from operating activities 1,444 1,485

As at 31 December 2010

As at 31 December 2009

(RMB mn) (RMB mn)

Cash & bank deposits 5,028 6,127

Investment in treasury products* 1,522 402

Bank balance and treasury products held 6,550 6,529

Current assets 7,441 7,073

Current liabilities 872 552

Net assets 7,515 7,354

Maintain Strong Financial Position

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Maintain strong cash position

Investments in government bonds and treasury products to enhance return on unutilized cash

Stable cash flows to support future business development and acquisitions

No bank borrowings

* Included investments in treasury products issued by MOF, PRC and principal-guaranteed treasury products issued by major commercial banks in the PRC

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Return to Shareholders

2010 2009 Change

For the year ended 31 December

(RMB cents) (RMB cents) (RMB cents)

Dividends per share

– Interim paid 4.16 3.82 +0.34

– Special Interim paid 4.16 1.27 +2.89

– Final (proposed) 3.59 3.91 -0.32

– Special final (proposed) 6.17 9.04 -2.87

Total 18.08 18.04 +0.04

Payout ratio 70% 70% -

While maintaining stronger cash position for future strategic and initiatives are our priorities, we continue to enhance shareholder value

High dividend payout of 70% of net profit in 2010

Our operating cash flow remains very strong

9.76

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Strategies & Future Plans

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2011: A year of adjustment

The sports industry is now reaching a certain level of maturity – slower growth, clearer

segmentation

In the meantime, the Chinese apparel and footwear market is expected to reach US level in the

coming 5 years, driven by key trends which all represent key opportunities:

Rise of the middle class

Urbanization and growing small cities

Trading-up

Health and wellness

E-commerce

Dongxiang has experienced extreme growth the past few years and now needs to strengthen its

foundations to be ready to grab new opportunities

2011 will be a year of adjustment:

Close monitoring of retail inventory and reduction to more healthy levels

Stronger brand pull through brand and product improvement

Improvement of existing store productivity via retail and sales management, with special focus

on sub-distributors

Optimization of current store portfolio

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Long-term Strategies

Store / network management (Optimize and expand network)

Retail management

Supply chain (Improve supply chain efficiency)

Process, org and others (Strengthen process/mgmt

discipline)

Brand (Clarify brand positioning and strengthen equity)

Product (Leverage Phenix platform)

Customer (GX relationship)

management (Basic customer

mgmt)

Improve basic competency Build advantages

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Long-term Strategies

Strengthen

brand identity

and product

differentiation

Store network

optimization

and geographic

expansion

Brand

diversification

Optimize

product

creation

Expand

footwear

products

Develop online

sales platform

Shift focus from

sell-in to sell-

through

Strengthen Brand Identity - Clarify Kappa brand positioning

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Kappa is a color offer

• Full of life, passion, richness of youthful energy, in-motion, expressive, impulse, bold, warmth, open-minded, positive, optimistic

• Unisex-to-feminine relevance

• An expression of youthful optimism or compensation for the lack of it

(Focus group Feb. 2011)

“Live the creative beauty of sport”

The aesthetics and creativity of sports

Fashionable casual look

Art as action expression

Romantic and artsy

• Clarify brand image and point of differentiation in the eyes of consumers

• Regain momentum, especially among higher tier city and younger consumers

• Strengthen fundamentals of brand in order to be able to expand range beyond core casual business

Objectives

Expand Range to Street and Fashion - Introduction of C19

Inspired by the colorful street fashion and bicycle component

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Form free

Engineered function Sexy

Exercises

Expand Footwear Products — Introduction of “Curves”

Optimize store portfolio

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Strategize store portfolio management POS development and expansion

Refine store opening criteria and support policies

Develop, manage and control of store opening plans

Develop and execute granular store footprint

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2 2

Develop strategic alliance with department stores and developers

Strengthen retail premium location of Tier 1 cities

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4

Enlarge average store size

3 Apply consumer/product segmentation to store segmentation and grasp

opportunities in casual space

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Progressively replace low performing/inadequate stores

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Optimize store portfolio - Store segmentation based on systematic consumer/product segmentation

Sports Fashion

Consumer / Product

segmentation

Store segmentation

(examples)

Sports floor

Low tier city store focus

Casual floor

Sports Fashion Casual

Participant Lover Sports inspire Brand driven Classic smart Follower Early adaptor

• Professional athletes

• Sports lovers

• Requires basic function sportswear

• KAPPA Fans

• Simple and clean style

• Edgy fashion lovers

• Trend followers

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Optimize store portfolio - New retail format

RETAIL OBJECTIVE 2012 NEW LOOK in Retail

2006

2009

EVOLUTION

INN

OV

AT

ION

• More IMPACT on brand voice

• More CREATIVITY in space

•More ATTRACTIVE & PRODUCTIVITY on product

Shift Focus From Sell-in to Sell-through

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Zero control on the POS

Full control on the POS

•Move from "pure wholesale" to "managed retail” •Leverage GX partnership •Special focus on sub-distributors

Pure wholesale

Level of control on the POS

Where we are now

Where we want to be in the

future

• Improve business intelligence – Expand

POS system • Develop retail

operation standards:

– VM, format, services

• Develop retail academy for customers

• Develop retail operation supervision system and link incentives to it

• Develop geography and segment based assortment plans and tools

Franchise Retail

"Managed retail"

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Brand Diversification

Achieved satisfactory results since

the opening of the first RDK store in

Beijing in 2010

Further promote the RDK series

through various marketing campaigns

Expect to open over 50 RDK stores in

China in 2011

Officially introduce Phenix to the

China market in 2011

Plan to open 20 to 30 stores in 2011

Optimize Product Creation

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Further optimize product creation by strengthening R&D efforts and further evolve Taicang factory

(Jiangsu) into a technical centre which works in close cooperation with Dongxiang technical centre in

Niigata, Japan

Leveraging the talents and resources in Phenix design department and at R&D centre in Japan

Expand Kappa’s official online store to a greater number of internet channels

Establish iKappa website: a multi-purpose platform covering online sales, marketing,

customer service, brand education, feedback on news products and a forum for Kappa

fans

Develop Online Sales Platform

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Expand the online sales business leveraging

on the investment in Mecox Lane Limited

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Open Forum