RESULTS

The directors of Yue Yuen Industrial (Holdings) Limited (the "Company") are pleased to announce the unaudited results of the Company and its subsidiaries (collectively referred to as the "Group") for the six months ended 31st March, 1998 with comparative figures for the corresponding period in 1997 as follows:

Notes:

1. TAXATION

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

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

2. INTERIM DIVIDEND

The directors are pleased to declare an interim dividend of 20 Hong Kong cents per share for the six months ended 31st March, 1998 to members whose names appear on the Register of Members on 20th July, 1998. The dividend will be paid on or before 28th July, 1998.

3. EARNINGS PER SHARE

The calculation of the basic earnings per share is based on the profit attributable to shareholders of US$83,464,000 (1997: US$81,398,000) and the 670,382,953 (1997: weighted average of 665,218,191) shares in issue during the period.

The calculation of the fully diluted earnings per share is based on the adjusted profit attributable to shareholders of US$85,544,000 (1997: US$82,159,000) on the assumption that all outstanding share options were exercised at the beginning of the period and that the subscription proceeds had been placed on fixed deposits with a leading bank to earn interest and on the adjusted 726,949,619 (1997: weighted average of 709,125,516) shares in issue and issuable.

CLOSURE OF REGISTER OF MEMBERS

The Register of Members of the Company will be closed from 13th July, 1998 to 20th July, 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 10th July, 1998 in order to qualify for the interim dividend mentioned above.

REVIEW AND PROSPECTS

The athletic footwear market has been soft since late last year. However, the Group has, during the period under review, achieved a turnover of US$701 million, which represents an increase of 2.68% when compared with the corresponding period last year. Profit attributable to shareholders was US$83 million, which represents an increase of 2.54% when compared with the corresponding period last year.

The Group was able to maintain its growth during this period because:

- in addition to athletic shoes, it successfully diversified and expanded production to include the casual and specialty shoes. In particular, casual and outdoor shoes sold during the period amounted to 6.4 million pairs, representing an increase of approximately 40% when compared with the same period last year.

- it was able to expand market share by maintaining its broad customer base.

- it established multi-national operations which met customers' requirements and their own respective policies of diversification.

- the Group's scale of operation has availed itself other sources of income such as financial income, rental income and investment income and gained higher efficiency as the production lines became mature and better co-ordinated.

The recent Asian financial turmoil has had minimal impact on the Group's financial performance and operations. As a manufacturer for export and the United States dollar being the Group's functional currency, the Group's revenues match most of its expenses and bank borrowings. Thus, the Group's exposure to currency devaluations in some Asian countries was minimal. The recent civil unrest in Indonesia has also not caused any material interruption to the Group's operations.

Looking ahead, with its significant investment in advanced facilities and technologies, the Group will be able to further meet the needs of and upgrade its services to its customers when the slowdown ends and the industry revives.

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

During the six months ended 31st March, 1998, 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 June, 1998
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