INTERIM RESULTS

The Board of Directors of Yau Lee Holdings Limited (the "Company") announces that the unaudited consolidated results of the Company and its subsidiaries (the "Group") for the six months ended 30th September, 1998, together with the comparative figures for the corresponding period in 1997 are as follows:-

Notes:

(1) Taxation

Hong Kong taxation is provided at the rate of 16% (1997: 16.5%) on the estimated assessable profits of each individual company in the Group for the period.

(2) Earnings per share

Earnings per share has been calculated using the unaudited consolidated profit attributable to shareholders for the period of HK$7,271,000 (1997: HK$22,058,000) and the 787,104,179 shares (1997: 787,104,179 shares) in issue during the period. Fully diluted earnings per share is not disclosed as the effect of dilution is insignificant.

INTERIM DIVIDEND

The Board of Directors does not recommend the payment of an interim dividend for the six months ended 30th September, 1998. (1997: Nil)

REVIEW OF OPERATIONS

During the six months ended 30th September, 1998, turnover of the Group reached HK$860,885,000, representing an increase of 5.98 per cent. over the corresponding period last year. However, high interest rates in the period had negative effect on the Group's profit margin and brought a set-back to the profitability. The unaudited consolidated net profit attributable to shareholders amounted to HK$7,271,000.

The Air Mail Centre and Joint Movements Unit at Chek Lap Kok Airport and the Sandwich Class Housing Scheme Blocks at Ap Lei Chau were completed during the period under review. The Group has also managed to secure two new contracts from the Hong Kong Housing Authority ("HKHA") for maintenance and repairs works at Sha Kok Estate valued at HK$36 million; and the Regional Term Contract (Regions North 3 and North 4) for the maintenance, repairs, alterations, additions to properties, sites and slopes managed by or under the responsibility of the HKHA with a value of HK$160 million for two years. As at 30th September, 1998, the Group was working on eight projects, with contract value totaling HK$3,465 million. The contract portfolio comprises construction and maintenance projects of local public housing and related facilities.

Subsequent to the period under review, the Group has further secured two contracts, namely, the development of Cheung Sha Wan West Phase 2 at the value of HK$752 million; the design and construction of Maintenance Depot for Electrical and Mechanical Services Department, Architectural Services Department and Highways Department at Siu Ho Wan in Lantau Island, worth approximately HK$304 million.

CONTRACTS ON HAND

The following is a summary of the Group's construction contracts on hand (contracts secured by associated companies are not included):

During the period under review, the Group announced a one-for-two rights issue that was completed in November 1998 and resulted in the issue of approximately 400 million additional shares and net proceeds of approximately HK$27 million.

PROSPECTS

In his 1998 Policy Address, the Chief Executive of the HKSAR has reaffirmed that the Government remains fully committed to maintaining an annual average supply of 50,000 units from public rental and home-ownership scheme flats. Labour and material costs have also stabilised to provide positive effects to the industry. However, a slowdown in the progress of property development projects in the private sector due to lacklustre market conditions have lured those contractors who previously were only active in the private sector to begin competing for contracts in the public sector. In order to maintain competitiveness, the prime objectives of the Group are to control cost stringently and to develop more innovative and efficient building methods. The precast facade manufacturing facility in Shenzhen commenced production in October 1998 for internal consumption and is in the process to market the products and services to other construction companies. At the same time, the Group is also looking into opportunities of investing in building material manufacturing and trading which can complement future development.

With proven track records in public sector projects and recent easing of interest rate pressure, the Directors are confident that the Group will continue to utilise its inherent strength to maintain its competitive edge.

YEAR 2000

The Group is aware that the Year 2000 problem may affect computers or other computer-related installations. The Group started looking into the situation in 1997 and has formulated various action plans to make internal improvements. The Group has taken into consideration the Year 2000 issue when making decisions to purchase new computers and designing new computer systems. The Group is also carrying out system tests on the existing computer installations. Barring any unforeseen external factors which the Directors of the Group cannot control, the Directors believe that the Group will be able to overcome the various anticipated Year 2000 problems.

CODE OF BEST PRACTICE

In the opinion of the Directors, the Company has complied with the Code of Best Practice as set out in Appendix 14 of the Listing Rules of the Stock Exchange of Hong Kong Limited throughout the period under review.

PURCHASE, SALE OR REDEMPTION OF SECURITIES

There was no purchase, sale or redemption of the Company's securities by the Company or any of its subsidiaries during the six months ended 30th September, 1998.

By Order of the Board
Wong Ip Kuen
Chairman

Hong Kong, 30th November, 1998

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