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Yeo was the youngest of three children born to Petty Officer First Class Francis Yeo and his wife Rhoda. Three weeks after his birth, his father was killed aboard the HMS Serpent while en route to Sierra Leone, after hitting rocks in Punta Bay, Spain. Three of the 150 people on board survived the shipwreck. His mother was an alemaker at the Royal William Victualling Yard. By 1901 Yeo was living in Plymouth, UK, with his mother, Rhoda Sarah Jarman, and his two sisters, Adelaide and Elsie.
Yeo enlisted into the Royal Navy aged 12, serving as a Bugler until 1911. He was promoted to Leading Seaman in 1912, becoming a Petty Officer in 1915 and a Warrant Officer in June 1917. At this time Walter was married to Ada and they purchased a family home in Plymouth.
Yeo was wounded on 31 May 1916, during the Battle of Jutland, while manning the guns aboard the battleship HMS Warspite. He sustained terrible facial injuries, including the loss of upper and lower eyelids. There is some uncertainty as to where he was first admitted to hospital, due to the poor documentation. However, he is known to have been admitted to Plymouth Hospital while waiting for a place at Queen Mary's Hospital in Sidcup, Kent, which was granted on 8 August 1917. He was treated by Sir Harold Gillies, the first man to transfer skin from undamaged areas on the body. Gillies opened a specialist ward at Queen Mary's Hospital for the treatment of the facially-wounded. Walter Yeo is thought to have been one of the first patients to be treated with this newly-developed technique; a form of skin transplantation called a 'tubed pedicle' flap.
During the long process of surgery, a 'mask' of skin was transplanted across Yeo's face and eyes, including new eyelids. By July 1919, he was found to be fit for active service again and was recorded as having completed courses in September 1919. He underwent a further operation in August 1921, after which his disfigurement was recorded as 'improved, but still severe', and he was recommended for medical discharge, which took place on 15 December 1921. Walter later received further treatment for a corneal ulcer at the Royal Naval Hospital in Plymouth in 1938.
Walter married Ada Edwards in 1914 in Plymouth, Devon. They had two daughters, the first being Lilian Evelyn Yeo, born 21 October 1914 in Plymouth. The second was called Doreen Y. Yeo, born 1919. Walter Yeo died in his birthtown Plymouth, where he had spent the majority of his life, in 1960.