The Directors of Herald Holdings Limited (the "Company") announce that the unaudited consolidated results of the Company and its subsidiaries (the "Group") for the six months ended 30 September, 1998 are as follows:-

Notes :

(1) Basic earnings per share

The calculation of basic earnings per share is based on the profit for the period attributable to sharesholders of $7,118,000 (1997:$11,588,000), and on 652,918,000 (1997:627,151,000) shares, being the weighted average number of shares outstanding during the period.

(2) Diluted earnings per share

There were no dilutive potential shares in existence during the period ended 30 September 1998.

The calculation of diluted earnings per share for the period ended 30 September 1997 was based on the profit for the period attributable to shareholders of $11,588,000 and on 642,378,000 shares, being the weighted average number of shares outstanding during the period, adjusted for the effects of all dilutive potential shares.

(3) Reconciliations

(4) Hong Kong profits tax is calculated at the rate of 16% (1997:16.5%) on the estimated assessable profits for the period. Overseas taxation is provided on the profits of the subsidiaries in accordance with the tax laws of the countries in which these subsidiaries operate.

BUSINESS REVIEW AND PROSPECTS

The Group's turnover and profit attributable to sharesholders for the six months to 30 September, 1998 amounted to $449,311,000 and $7,118,000 respectively. These represent a decrease of 19% and 39% respectively as compared with the corresponding period in the previous year. The decrease of the net profit was mainly due to the reduction in turnover.

The period under review was a difficult one for the Group. Both the toy division and the houseware division started the current financial year with much lower sales order books compared to that of the previous year. Facing severe competition in the toy market, the toy division's turnover and net profit dropped by 42% and 76% respectively over the prior period. The situation improved towards the end of the period when the sales order book increased to a much healthier level. In the beginning of the fiscal year, the houseware division experienced a severe drop in its business from a major Japanese customer. Nevertheless, our marketing efforts to overcome this drop were successful and the division made up its sales with business from new customers from both Japan and the United States. The division had a respectable contribution to the Group's profit.

The business of the timepiece division remained steady with a slight increase in its turnover over the same period of last year. The half-year saw the launch of a number of new brand licences in the United Kingdom including "Wrangler", "Speedo", "Elle Sport" and "Elle Petite".

After the closure of its Shanghai factory, the computer head division now concentrates its manufacturing activities in its Zhuhai facilities. The future of the newly developed higher-end head products, particularly the half-inch ferrite heads, is more promising. The division has streamlined its operation and is now more competitive in the pricing of its products. Even though the division suffered an overall loss in the first-half year, it has posted profits consecutively in the recent last three months.

Last year, the Group's results were severely affected by the poor performance of the computer head division. It is now likely that this division will have returned to profitability in the current year.

As a result, it is anticipated that the Group's profit for the year will be enhanced by this and will show an overall improvement over that of last year. At the same time, there are uncertainties concerning the retail business climate in both the United States and the United Kingdom which are the major markets for the Group's consumer products.

FINANCIAL POSITION

As at 30 September 1998 the Group's financial position remained strong with a net cash surplus of $77.6 million (1997: $63.3 million). Due to seasonal patterns, the net cash surplus was $31.7 million down from $109.3 million, which was the balance as at 31 March 1998. The decline can be largely accounted for by a corresponding increase of $67.3 million in trade debtors.

DIVIDENDS

The Directors have declared an interim dividend of 1 cent per share (1997 : 1 cent). The total amount of dividend payment of $6,517,000 was based on the total number of shares in issue as at 14 December, 1998 being the latest practicable date prior to the announcement of the interim results. Dividend will be payable on 21 January, 1999 to shareholders registered in the Register of Members on 4 January, 1999.

REGISTER OF MEMBERS

The Register of Members will be closed from 31 December, 1998 to 4 January, 1999, both days inclusive. Shareholders should ensure that all transfers accompanied by relevant share certificates are lodged with the Company's Registrars, Tengis Limited at 1601 Hutchison House, 10 Harcourt Road, Hong Kong, for registration not later than 4:00 pm on 30 December, 1998 in order that they may receive their dividend entitlement.

Herald Holdings Limited
Hong Kong, 16 December 1998.

Contact person :	Mr. Robert Dorfman at 2522-6181
	Mr. Michael Thong at 2726-5565

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