The directors of Yue Yuen Industrial (Holdings) Limited (the "Company") are pleased to announce the results of the Company and its subsidiaries (collectively referred to as the "Group") for the year ended 30th September, 1997 with comparative figures for the previous year as follows:

Notes:

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

During the year, the Group changed its reporting currency for the preparation of the financial statements from Hong Kong dollars to United States dollars ("USD"). USD is the currency in which the majority of the Group's transactions are denominated and the Directors consider that the change will result in a more appropriate presentation of the Group's transactions in the financial statements. Comparative figures have been restated as if the financial statements had always been presented in USD. This change in reporting currency has no significant impact on the financial position of the Group or the Company either at 30th September, 1996 or 30th September, 1997, or on the results or cash flows of the Group for the years then ended.

2. TAXATION

A substantial portion of the Group's profits neither arose in, nor was derived from, Hong Kong and therefore was not subject to Hong Kong Profits Tax.

Overseas taxation is calculated at the rates prevailing in the respective jurisdictions.

3. DIVIDENDS

The directors propose to pay a final dividend of Hong Kong 35 cents per share for the year ended 30th September, 1997 to members whose names appear on the Register of Members of the Company on 25th March, 1998. Subject to approval at the forthcoming annual general meeting, dividend warrants will be sent to members on or before 1st April, 1998.

* The dividend per share figure for 1996 has been restated to reflect the effect of the consolidation of shares.

The amount of the final dividend proposed for the year ended 30th September, 1997 has been calculated by reference to 670,382,953 shares in issue as at the date of this report.

4. EARNINGS PER SHARE

The calculation of the basic earnings per share is based on the profit attributable to shareholders of US$157,670,000 (1996: US$98,762,000) and the weighted average of 667,807,648 (1996: 501,948,965) shares in issue during the year after adjusting for the effect of the consolidation of shares.

The calculation of the fully diluted earnings per share is based on the adjusted profit attributable to shareholders of US$160,493,000 (1996: US$100,271,000) and on the assumption that all outstanding share options were exercised at the beginning of the year or the date of grant, if later, and that the subscription proceeds had been placed on fixed deposits with a leading bank to earn interest and on the adjusted weighted average of 718,061,985 (1996: 537,148,965) shares in issue and issuable after adjusting for the effect of the consolidation of shares.

The earnings per share figure for 1996 has been restated to reflect the effect of the consolidation of shares.

CLOSURE OF REGISTER OF MEMBERS

The Register of Members of the Company will be closed from 18th March, 1998 to 25th March, 1998, both days inclusive, during which period no transfer of shares will be effected. All transfers, accompanied by the relevant share certificates must be lodged with the Company's Branch Share Registrars, Secretaries Limited at 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong not later than 4:00 p.m. on 17th March, 1998 in order to qualify for the final dividend mentioned above.

BUSINESS REVIEW AND PROSPECTS

Results
The Group achieved record turnover and profit for the year ended 30th September, 1997. Turnover was US$1,414 million compared to US$543 million in the previous year. Profit attributable to shareholders was US$158 million compared to US$99 million. Earnings per share was 23.6 US cents (HK$1.83), an increase of approximately 20%. The strong results reflect the continued growth of the Group's business as well as the effect of the acquisition of the remaining 55% of Pou Yuen Industrial (Holdings) Limited ("Pou Yuen") which was completed in September 1996.

Compared to unaudited pro forma results for the year ended 30th September, 1996, the Group's turnover increased by 38% from US$1,023 million to US$1,414 million, and profit attributable to shareholders increased by 32% from US$120 million to US$158 million assuming Pou Yuen had been acquired by the Group on 1st October, 1995.

Business review
As a principal supplier to all of the major athletic shoe brands in the world, the Group continues to benefit from the healthy growth in global demand for athletic shoe products. The Group has successfully expanded its customer base and increased its sales to some of its key customers. In addition, the Group has significantly expanded its production and customer base for casual shoes. In the year ended 30th September of 1997, the Group produced 10.2 million pairs of casual shoes, an increase of 65% from the previous year. Currently, casual shoes represent 14% of the Group's total production by volume as against 11% in 1996. Going forward, the Group will continue to expand its product categories to include specialty shoes such as baseball, soccer, golf and hiking shoes, steel-toe shoes, ski-boots and designer, fashion and casual shoes. The Group's market position and its management initiatives have enabled the Group to grow faster than the industry.

To meet the expected growth in demand, the Group has made significant investment to expand its capacity in all its production bases. At the end of September 1997, the Group had a total of 160 production lines located in China, Indonesia and Vietnam. This represents an increase of 37 production lines during the year. Total production of shoes reached 74.3 million pairs, an increase of 31% from the 56.8 million pairs in the previous year. Significant investment has also been made during the year to upgrade product development capabilities and production facilities, particularly in China and Vietnam.

The recent currency turmoil in the region has had minimal impact on the financial performance and operations of the Group. The principal operating activities of the Group, particularly revenue, are transacted in US dollars. As a result, the Group has changed its reporting currency in the preparation of its financial statements from Hong Kong dollars to US dollars for the financial year ended 30th September, 1997. This change highlights and more accurately reflects the economic substance of the Group's business. The Group's financing practice has been to match its assets and liabilities in the same currency. In June 1997, the Group completed a debt syndication equivalent to US$210 million to finance the continued expansion of its production capacities. Under a swap arrangement, this debt pays a competitive interest rate, basically linked to the US interest rate environment.

Staff relations
The Group has continued to invest in the improvement of the working and living conditions of our employees. In particular, we have focused on improving staff welfare, safety measures and production environment. The directors believe that these efforts have resulted in the strong dedication of our employees to the Group which, in turn, has facilitated the continued success of our operations.

Outlook
The directors believe that the footwear industry on a global basis will continue to grow in 1998 despite the current macro-economic environment in Asia. In particular, the casual and outdoor shoe sectors are expected to experience a stronger growth in demand. The competitive advantages of the Group, which include economies of scale, diversified product mix and client base and strong market position, should enable the Group to benefit from the dynamic changes in the industry in the coming year. The significant expansion in capacity in 1997 has positioned the Group well for continued growth. In 1998, the Group will continue its efforts on product development to better cater to the special needs of its new and existing customers. These efforts will strengthen the Group's overall competitiveness and increase its market share in the footwear industry.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES

During the year, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed securities.

By Order of the Board
Tsai Chi Neng
Chairman

Hong Kong, 18th February, 1998
Web Site: http://www.irasia.com/listco/hk/yueyuen

NOTICE IS HEREBY GIVEN that the annual general meeting of the abovenamed company (the "Company") will be held at Ivy Room, 10th Floor, Mandarin Oriental Hotel, 5 Connaught Road Central, Hong Kong on 25th March, 1998 at 9:00 a.m. for the following purposes:-

1. To receive and consider the audited financial statements and the reports of the directors and auditors for the year ended 30th September, 1997.

2. To declare a final dividend of Hong Kong 35 cents per share for the year ended 30th September, 1997.

3. To elect directors and to authorise the board of directors to fix their remuneration.

4. To appoint auditors and to authorise the board of directors to fix their remuneration.

5. As special business, to consider and, if thought fit, pass the following resolutions as ordinary resolutions:-

A. "That:-

(a) subject to paragraph (c), the exercise by the directors of the Company during the Relevant Period of all the powers of the Company to allot, issue and deal with additional shares in the capital of the Company and to make or grant offers, agreements and options which might require the exercise of such power be and is hereby generally and unconditionally approved;

(b) the approval in paragraph (a) shall authorise the directors of the Company during the Relevant Period to make or grant offers, agreements and options which might require the exercise of such power after the end of the Relevant Period;

(c) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) by the directors of the Company pursuant to the approval in paragraph (a), otherwise than pursuant to a Rights Issue or the exercise of the subscription rights under the share option scheme of the Company, shall not exceed 20 per cent. of the aggregate nominal amount of the share capital of the Company in issue as at the date of this resolution and the said approval shall be limited accordingly; and

(d) for the purposes of this resolution:-

"Relevant Period" means the period from the passing of this resolution until whichever is the earlier of:-

(i) the conclusion of the next annual general meeting of the Company;

(ii) the expiration of the period within which the next annual general meeting of the Company is required by the Bye-laws of the Company or any applicable law to be held; and

(iii) the revocation or variation of this resolution by an ordinary resolution of the shareholders of the Company in general meeting; and

"Rights Issue" means an offer of shares open for a period fixed by the directors of the Company to holders of shares on the register on a fixed record date in proportion to their then holdings of such shares (subject to such exclusion or other arrangements as the directors of the Company may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of, or the requirements of any recognised regulatory body or any stock exchange in any territory outside Hong Kong)."

B. "THAT:-

(a) the exercise by the directors of the Company during the Relevant Period of all powers of the Company to purchase its own shares, subject to and in accordance with all applicable laws, be and is hereby generally and unconditionally approved;

(b) the aggregate nominal amount of shares of the Company purchased by the Company pursuant to the approval in paragraph (a) during the Relevant Period shall not exceed 10 per cent. of the aggregate nominal amount of the share capital of the Company in issue as at the date of this resolution and the said approval be limited accordingly; and

(c) for the purposes of this resolution:-

"Relevant Period" means the period from the passing of this Resolution until whichever is the earlier of:-

(i) the conclusion of the next annual general meeting of the Company;

(ii) the expiration of the period within which the next annual general meeting of the Company is required by the Bye-laws of the Company or any applicable law to be held; and

(iii) the revocation or variation of this resolution by an ordinary resolution of the shareholders of the Company in general meeting."

C. "That conditional upon resolution no. 5B above being passed, the aggregate nominal amount of the number of shares in the capital of the Company which are repurchased by the Company under the authority granted to the directors as mentioned in resolution no. 5B above shall be added to the aggregate nominal amount of share capital that may be allotted or agreed conditionally or unconditionally to be allotted by the directors of the Company pursuant to resolution no. 5A above."

By Order of the Board
Danny Lam
Company Secretary

Hong Kong, 18th February, 1998

Principal Office:
7th Floor, Blocks A-D
Hop Hing Industrial Building
702 Castle Peak Road
Kowloon, Hong Kong

Notes:-

(1) A member entitled to attend and vote at the meeting convened by the above notice is entitled to appoint proxies to attend and, in the event of a poll, vote in his stead. A proxy need not be a member of the Company. In order to be valid, the form of proxy must be deposited at the Company's principal office in Hong Kong together with a power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority, not less than 48 hours before the time for holding the meeting.

(2) The register of members of the Company will be closed from 18th March, 1998 to 25th March, 1998, both days inclusive, during which period no transfer of shares will be effected. In order to qualify for the final dividend to be approved at the annual general meeting, all transfers accompanied by the relevant share certificates must be lodged with the Company's branch share registrars in Hong Kong, Secretaries Limited, 5th Floor, Wing On House, 111 Connaught Road Central, Hong Kong not later than 4:00 p.m. on 17th March, 1998.

© Copyright 1996-2008 irasia.com Ltd. All rights reserved.

DISCLAIMER: irasia.com Ltd makes no guarantee as to the accuracy or completeness of any information provided on this website. Under no circumstances shall irasia.com Ltd be liable for damages resulting from the use of the information provided on this website. TRADEMARK & COPYRIGHT: All intellectual property rights subsisting in the contents of this website belong to irasia.com Ltd or have been lawfully licensed to irasia.com Ltd for use on this website. All rights under applicable laws are hereby reserved. Reproduction of this website in whole or in part without the express written permission of irasia.com Ltd is strictly prohibited. TERMS OF USE: Please read the Terms of Use governing the use of our website.