22 August 2012

2012 Interim Results Announcement

2

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 “Financial Review” and “Business Review and Medium Term Strategic Plan”.

Agenda

3

Industry Review

Financial Review

Q&A

Business Review & Medium Term Strategic Plan

Conclusion

4

Financial Review

5

Results Highlights

For the six months ended 30 June

2012 2011 Change (RMB mn) (RMB mn) (%)

Revenue 832 1,179 -29.4%

Gross profit 417 722 -42.2%

Operating profit 53 277 -80.9%

Profit attributable to equity holders 97 225 -56.9%

Gross profit margin 50.2% 61.3% -11.1 p.p.

Operating profit margin 6.4% 23.5% -17.1 p.p.

Net profit margin 11.7% 19.1% -7.4 p.p.

693394

247

185

39

21

0

500

1,000

1,500

1H 2011 1H 2012

600

979

990

614

189

218

0

500

1,000

1,500

1H2011 1H2012

832 1,179

China (Kappa China and others)

Japan (Kappa Japan and Phenix)

Revenue by Market & Brand

Apparel

Footwear

Accessories

5.1 p.p.

5.6 p.p.

0.5 p.p.

Revenue by Product – Kappa China

Accessories 3.5% (4.0%)

Apparel 65.7% (70.8%)

Footwear 30.8% (25.2%)

Remark: Comparable figures for 1H2011 are shown in brackets

1H2012

16%

Revenue by Market, Brand & Product

84% 74%

26%

RMB mn RMB mn

6

7

Gross profit margin by market Gross profit margin by product – Kappa China

Gross profit margin of the China segment decreased mainly due to: (1) the Group’s effort in clearing off-season products at discounted prices in 1H2012; (2) the Group provided greater support to distributors and offered more wholesale discounts.

* Gross profit of the Japan segment also decreased owing to inventory clearance, thus led to a drop in gross profit margin as well.

Gross Profit Margin by Market & Product

66.7%

55.8%58.1%

49.4%

66.8%

57.2%64.5%

53.9%

30%

40%

50%

60%

70%

1H 2011 1H 2012

Apparel Footwear Accessories Overall

64.4%

53.6%

45.0%40.8%

61.3%

50.2%

30%

50%

70%

1H 2011 1H 2012

China Japan Overall

For the six months ended 30 June

2012 2011 Change (RMB mn) (RMB mn)

A&P expenses 90 129 -30.2%

As a % of sales 10.8% 11.0% -0.2 p.p.

Staff cost 105 103 1.9%

As a % of sales 12.6% 8.7% 3.9 p.p.

Product R&D 45 52 -13.5%

As a % of sales 5.4% 4.4% 1.0 p.p.

During the period, actual amounts of A&P and design & product R&D expenses decreased compared to 1H2011, but overall % to revenue increased due to significant sales drop caused by order volume control and inventory clearance.

Operating Expenses

8

Inventory

294

508446

125145

304

0

200

400

600

0

200

400

600

1H2011 FY2011 1H2012

596

426327102

81

112

0

50

100

150

0

200

400

600

1H2011 FY2011 1H2012

Inventory turnover days Affected by inventory repurchase in 2011, inventory level increased sharply at the end of 2011.

The Group exerted extra efforts in inventory clearance in 1H2012, causing inventory level to drop by 12.2%. However, the inventory turnover days increased due to decrease in sales and related cost of sales in 1H2012.

Trade receivable days In view of the overall market environment, credit terms have been moderately extended in

order to enhance the Group’s support to major distributors.

Trade Receivables

Inventory & Trade Receivables – China Segment

RMB mn Days

9

RMB mn Days

For the six months ended 30 June

2012 2011 (RMB mn) (RMB mn)

Operating cash inflow/ (outflow) 10 (52)

Maintain Solid Net Cash Position

（1）Included restricted bank deposit of RMB135.8 million (31/12/2011: RMB136.5 million) （2）Included investments in treasury products issued by major commercial banks in the PRC

As at 30 June 2012 As at 31 December 2011

(RMB mn) (RMB mn)

Cash and bank deposits（1） 3,343 3,775

Investment in treasury products（2） 1,452 1,068

Less: bank loans - - Net bank balance and treasury products held 4,795 4,843

10

11

Interim Dividend & Share Buyback

For the six months ended 30 June

2012 2011

Earnings per share 1.75 3.99

Interim dividend 0.53 1.19

Interim special dividend 0.70 1.59

Interim dividend per share

1.23 2.78

Actual payout ratio 70% 70%

Share buyback

Between April and May 2012, the Group bought back a total of 100mn China Dongxiang shares at a consideration of HK$104 million, representing 1.8% of its issued share capital

Interim dividend

RMB cents

12

Industry Review

13

A Development Bottleneck in the Overall Sportswear Industry

China Sportswear Industry

The industry has matured and entered a stage of moderate development after rapid growth

Intense competition resulted from the expansion by both domestic and international sportswear

and casual wear brands

Product homogeneity and intense market competition

leading to decreasing SSS

Declining sell-through rate of newly-launched products

Accumulated inventory

Lower retail discounts

Increasing operating costs

Reducing operating margin

Macro-economy

Vicious Cycle

Macro-economy

14

Business Review & Medium Term Strategic Plan

15

Overview of Medium Term Strategic Plan

3

Brand Product

Channel New Business

• Strengthen the clear and unique Kappa brand philosophy

• Emphasize on the brand DNA of “sports, fashion, sexiness and style”

• Integration of multiple resources

• Develop the instant reaction capability

• Kappa Kids

• Kappa Eyewear

• RDK • Phenix

• Change in sales pattern

• Long-term and healthy development of sales channels

4

1 2

16

Brand - Clear and Unique Brand Philosophy

Kappa’s Unique Brand

Philosophy

1a

• Passion

• Overwhelming dynamic

• Vigorous and natural curves

• Technique-oriented

• Artistic

• Participation and enjoyment

• Perfect integration of sports and fashion

• Colorfulness

• Trend of literature and art

• Belief in the beauty of sports

• Advocacy of sports and freedom

• Eternal pursuit of creativity and personalization

Style

Sports

Fashion

17

Brand - Mix and Match Concept

• New theme of Kappa : Mix and Match

• Affluent choices of fabric for different series in product positioning

• Highlight Kappa’s embedded features：cutting, materials, details

1b

Mix and Match Concept

18

Brand - Mix and Match Concept (continued)

1b

Casual Party

Street Work

19

Brand - Mix and Match Concept (continued)

1b

iKappa

• Provides mix and match styles from Kappa designers

• An innovative background simulation function enabling consumers to mix and match better styles

• Not only is it an online sales platform, it also serves as a platform to convey Kappa’s fashion culture, latest trends and unique style

20

Brand - Play with Style

1c

Play with Style

21

Brand- Innovative and Smart Marketing

1d

Microfilm Social Media

Sports Event Sponsorship Drama Sponsorship, Joint

Marketing with Bazaar

• Festive blessings, song dedication, blog postings and photo album promotion during festivals

• Promoting Kappa products with photos of online drama “Mahua Funage”

(开心麻花)

• Engage in joint marketing with Bazaar, conveying the brand philosophy of mix and match to audience

• Promote Kappa’s brand positioning as a trendy sport through microfilm

• Kappa continued to be the official sponsor of Italian Serie A Club AS Roma

22

Product - Integration of Multiple Resources

China Design Team • Establish Taicang factory as the

Research & Technology Center (RTC) in China

• Nurture China team in RTC

Design Team Collaboration of R&D Centers in China and Japan

b a

Japan Design Team

Korea Design Team

2

23

c d

Sensitive to market performance

Maintain close cooperation with core distributors

Pay close attention to sales figures

Strengthen technology

development department

Introduce technical consultants from Japan

Expand sources of fabric

Swift Response in Production

• Control costs throughout all stages in product planning and development

• Innovation is not the only focus of R&D and technology, enhancing production efficiency is also key to achieve a win-win scenario

Product - Integration of Different Resources

Develop Instant Reaction Capability Enhance Cost Control

2

24

Change in Sales Pattern

Channels – Maintain Long-term and Healthy Development

3

Inventory clearance

• Set targets for different phases and the flexible inventory resale polices, execute with efficiency through e-commerce and factory outlets

• Completed the repurchase of inventories totaling RMB1.45 billion in terms of tag price as of the end of December 2011

• Resold products amounting to RMB600 million at tag price through factory outlets and e-commerce platforms in 1H2012

• From “pre-orders” to “prop orders” • Set conservative sales order targets，alleviating inventory pressure by

increasing the “prop orders” proportion • Monitor retail sales performance (Sell-Through) • Less SKU presented at trade meetings

25

4

• Phenix is the sole uniform sponsor of Norway National Team in 2012

• As at 30 June 2012, there were 26 Phenix stores in China

• As at 30 June 2012, there were 18 RDK stores

Phenix Robe di Kappa

Kappa Eyewear Kappa Kids

Proactive New Business Development

The Group’s multi-brand competitiveness is the pivotal point of Dongxiang Concept Store’s new integrated operating strategy

Trendy

Purity

Quality

Outdoor

Dongxiang Concept Store 4

26

27

Conclusion

28

Pragmatism, Passion and Innovation

Corporate Integrated Management

Strengthening Financial Control

Strategic Goals 2012

Brand Product Channels New Business

“Brand + Product” Macro Supply Chain

System

“Brand + Retail” New Business

Model

Q&A