[Pou Chen] Announcement of Profit Warning by Key Subsidiary Yue Yuen Industrial (Holdings) Limited

1. Date of Event: July 24, 2026

2. Company Name: Yue Yuen Industrial (Holdings) Limited ("Yue Yuen")

3. Relationship to Company: Subsidiary

4. Cross-shareholding Ratio: Subsidiary in which the Company holds 51.36%

5. Reason for Announcement:

(1) The Board of Directors of Yue Yuen wishes to inform its shareholders and potential investors that, based on a preliminary review of Yue Yuen’s unaudited consolidated financial statements for the first half of 2026 (the six months ended June 30, 2026), Yue Yuen expects its post-tax net profit attributable to owners of the Company (“profit”) to decline by approximately 55% to 60% compared to the profit of approximately USD 171.2 million in the same period of 2025.

(2) Based on current information available to Yue Yuen, the decline in profit is primarily due to multiple challenges in the operating environment of its manufacturing business. Weak demand has led to a reduction in sales volume, compounded by rising costs and pressure on production efficiency, negatively impacting the gross margin of Yue Yuen’s manufacturing business in the first half of 2026. Further analysis is as follows:

(A) Insufficient demand and external environment impact: Affected by macroeconomic uncertainty, tariff policies, and inflation risks, end-market inventory replenishment demand has been conservative, and brand customers have placed orders more cautiously. This has intensified order volatility in the first half of 2026, resulting in a 4.7% year-on-year decrease in revenue from Yue Yuen’s manufacturing business. The reduced scale has created operational deleveraging, and tariff concessions have also had a negative impact;

(B) Rising labor and manufacturing costs: In line with Yue Yuen’s long-term production capacity planning, new production facilities are ramping up operations as scheduled, leading to an increase in the number of manufacturing personnel compared to the same period last year. Combined with rising wages across regions and failure to achieve targeted reductions in overtime and non-productive costs, overall labor and manufacturing expenses have increased;

(C) Production scheduling imbalance: In the first quarter of 2026, the three major production sites of Yue Yuen experienced overlapping long holidays, posing significant challenges to production scheduling. In the second quarter, monthly orders across factories became increasingly volatile and difficult to coordinate, while global geopolitical tensions and supply chain uncertainties caused further disruptions. Despite Yue Yuen’s active efforts to coordinate order rhythms to mitigate these impacts, manufacturing facilities continued to face highly uneven capacity utilization throughout the first half of 2026, leading to reduced production efficiency and further increased unit costs for footwear manufacturing;

(3) Yue Yuen will continue to closely monitor changes in the global political and economic environment and maintain rapid responsiveness as a core guiding principle, balancing demand, order scheduling, and labor supply to strengthen operational efficiency.

(4) The information contained in this announcement is based solely on the preliminary assessment by Yue Yuen’s Board of Directors of its unaudited consolidated financial statements for the first half of 2026. It has not been reviewed or audited by Yue Yuen’s auditors, nor reviewed by Yue Yuen’s Audit and Risk Management Committee. As the unaudited consolidated financial statements for the first half of 2026 have not yet been finalized, the actual figures may be adjusted upon further review and could differ from the information presented in this announcement. Shareholders and potential investors are advised to refer to the unaudited consolidated results announcement for the first half of 2026, which will be published on August 12, 2026.

6. Countermeasures: None

7. Other Matters to be Disclosed: For detailed content of the above announcement, please refer to Yue Yuen’s website: www.yueyuen.com; or the Hong Kong Stock Exchange’s disclosure website: www.hkexnews.hk.