14th July, 1999

Vitasoy Achieves Sales Growth in All Major Markets
Start-up Problems at New US Plant Resolved

Vitasoy International Holdings Limited (SEHK 345), the leading non-carbonated beverage and food manufacturer and distributor based in Hong Kong, announced turnover of HK$1,836 million for the year ended 31st March 1999, a healthy increase of 8.5% over the previous year. The sales growth was attained amidst tough economic and market conditions.

Profit attributable to shareholders, however, saw a year-on-year decline of 12.6% to HK$106 million. Despite an improved second half (first half had recorded a fall of 26%), profit performance was largely affected by the bigger-than-expected losses arising during the first three quarters from the Group's new plant in the US and predictable start-up expenses from another new plant in China.

Basic earnings per share were 16.4 cents as against 18.9 cents (adjusted for bonus issue) for the same period last year. The Directors of the Group recommended a final dividend of 5.2 cents per share (1997/98 : 5.2 cents, adjusted for bonus issue) which, together with the interim dividend of 3.6 cents, represents a total dividend per share for the year of 8.8 cents (1997/98: 8.8 cents, adjusted for bonus issue).

Commenting on the results, Winston Lo Yau-lai, Executive Chairman and Managing Director of the Group, said "This year's profit was eroded by the start-up losses arising from our new plants in the US and in China but those from the US plant were larger than our expectation.

"With the production problems resolved in the third quarter, our US operations saw a marked reduction in operating expenses in the final quarter of the year under review. The Group's new plant in Ayer located on the East Coast currently produces tofu and soymilk at about 75% and 50% utilization respectively.

Demand for the Group's products in all of the major markets - Hong Kong, the US and mainland China - showed promising growth. According to Mr. Lo, overall sales of the US operations rose 20% with Natural Vitasoy Soymilk and tofu products in the US capturing strong growth of more than 40% and 15% respectively. Vitasoy's products continue to be market leaders in the US soya food market.

China, on a small but ever growing base, saw the biggest rise in turnover of over 60%. "This was largely a result of our strategic approach to cater to the Southern and Eastern China markets with separate plants in Shenzhen and Shanghai respectively. The sales gap between the Southern and Eastern China markets has been narrowing, indicating the Group's ability to efficiently develop a strong base in Eastern China," said Mr. Lo.

Hong Kong, the largest market of the Group, recorded modest growth in both sales and profit against a background of poor consumption sentiment and very competitive retail environment. Sales were driven by a number of initiatives such as packaging extension of various drinks into cans and expansion of distribution of fresh milk and fresh soymilk into major supermarket chains. Award-winning advertising and effective marketing campaign also played a key role.

Mr. Lo added that performance in other markets was mixed. Australia and New Zealand registered strong sales growth whereas Singapore and Europe called for more efforts to yield better results.

Looking ahead, Mr. Lo said "We are confident of our long term growth. For the immediate future, we will focus on new product development, product range extension, brand building, market expansion and further cost improvement.

"In particular, we look to the US with much optimism given the increased awareness of the health benefits of soy products and the expectation of approval from the Food and Drug Administration for using health claim labels on packaging.

"We are encouraged by the growing awareness among people from other parts of the world towards the benefits of including soy in their daily diet. We expect to see a strong increase in consumption of soy beverages and foods," added Mr. Lo.

Founded in 1940, Vitasoy International has successfully developed and launched a range of more than 30 products in more than 120 different forms and sizes. These products are sold in over 20 markets around the world. The Group is one of the largest and most established manufacturers and distributors of non-carbonated beverages in Hong Kong

For further information please contact:
Vitasoy International Holdings Limited

Stella Lung
Public Relations Manager
Vitasoy International Holdings Limited
Tel: 2468 9644 Fax: 2465 1008
e-mail:pubrel@vitasoy.com