Benefitting from disposals of property assets, textile producer Fountain Set (Holdings) said net profit for the financial year ended August jumped 87.6 per cent. Net profit increased to HK$306.8 million, from HK$163.5 million a year earlier. Turnover increased 7.5 per cent to HK$7.13 billion. Excluding the disposal gain of property assets, net profit only rose 8.9 per cent to HK$178 million, with the profit margin standing at 2.5 per cent, as in the last financial year. The company declared a final dividend of 6.5 HK cents per share, compared to seven HK cents last year. Chairman Ha Chung-fong said rising energy prices, the yuan's appreciation, high interest rates and rising labour costs, put pressure on the profit margin of Fountain Set and other mainland textile firms. Mr Ha expects such pressure will continue to challenge the manufacturing sector in the mainland. For export-oriented Fountain Set, the challenges may also include the potential of a slowing down in the US economy and the reduction in value-added tax rebates for export products by China. Fountain Set is looking to set up a manufacturing base in Jiangsu province in addition to its existing one in Jiangyin, as part of its strategy to relocate some of its production in Guangdong province to Jiangsu amid rising production costs in southern China. Its joint-venture subsidiary, Dongguan Fuan Textiles, had paid 11.5 million yuan for the shortfall in effluent discharge fees in August and needs to relocate some of its workload to Jiangyin's fabric mill because of excessive effluent discharge. The Hong Kong-listed firm is also looking to expand its business scope to the manufacturing of fabric production machinery. Its machinery unit, Jiangyin Jintian, is expected to begin operation in the second quarter of next year. Fountain Set said it planned to set aside HK$420 million for capital expenditure for the next financial year, compared to HK$460 million for the year ended August.