HIGHLIGHTS

PROSPECTS

Hong Kong, 19 March 1998 -- For the year ended 31st December 1997, Li & Fung Limited, the Hong Kong-based multinational export trading group, announced attributable profit of HK$375 million compared to HK$300 million in 1996, an increase of 25%. The Group's turnover was HK$13.3 billion compared with HK$12.5 billion for the same period in 1996. Earnings per share (excluding an exceptional item) were 63.3 cents as against 51.3 cents in 1996.

Group Managing Director of Li & Fung, Mr William K Fung, said "We have been focusing on improving operating margins and I am delighted that this has resulted in a strong increase in our profitability for this year."

The Board of Directors has recommended a final dividend of 31 cents (26 cents in 1996). An interim dividend of 13 cents was paid in September 1997 (10 cents in 1996) making a total of 44 cents for the year.

Commenting on the financial turmoil in Asia, Mr Fung said that the Group was well sheltered: its revenue is in US dollars and its principal markets in Europe and the US are healthy. He pointed out that devaluation of currencies in some of Li & Fung's sourcing countries has not translated into significantly lower export prices yet. However, the Group has benefited from lower operating costs in these countries and some time in the future, these lower currency values are expected to lead to strong export growth.

Mr Fung concluded that "Whatever the situation in south-east Asia, we are well positioned by our strong global sourcing network which includes China and the Indian sub-continent to provide the best service to our customers. We are also building sourcing bases in the Mediterranean for our customers in Europe and in Central America for the US market."

Referring to the exceptional item of HK$20 million, Mr Fung said that it was a provision to cover an intended out-of-court settlement for a class action brought in 1995 in the United States against the Company and its subsidiaries. As previously disclosed in the annual report, this action related to the secondary public offering of Cyrk, Inc., in which one of the Company's subsidiaries previously had a holding. The sales of this holding during the public offering bad netted an exceptional profit for the Group in 1994.

Looking to the future, Mr. Fung said that the Group will make appropriate acquisitions and develop strategic alliances to further strengthen its market position and increase revenues and profitability. In line with this strategy, the Group is currently in negotiation with the Hudson's Bay Company, Canada's largest department store retailer, to act as its exclusive buying agent by acquiring the assets and business of Linmark Westman International Group, its wholly owned trading company. This proposed acquisition is subject to due diligence and contract, and the relevant board approvals.

Li & Fung was established as a trading house in Canton in 1906. Today, the Group is headquartered in Hong Kong with a network of 42 offices worldwide and is listed on The Stock Exchange of Hong Kong.

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