(Incorporated in Bermuda with limited liability)


The Board of Directors (the "Board") of Lerado Group (Holding) Company Limited (the "Company") is pleased to announce the unaudited consolidated results of the Company and its subsidiaries (the "Group") for the six months ended 30th June, 1999 together with the comparative figures for the corresponding period in 1998, as follows:

                                                      Six months ended
                                                          30th June,
                                                     1999          1998
                                                  HK$'000       HK$'000
                                       Notes                    (Note 1)

Turnover                                          618,459       572,982
                                              ===========   ===========
Profit from ordinary activities
   before taxation                                 96,094        74,206
Taxation                                 2          6,090         2,137
                                              -----------   -----------
Profit attributable to shareholders                90,004        72,069
                                              ===========   ===========
Dividends                                3         21,703        37,456
                                              ===========   ===========
Earnings per share                       4
   - Basic                                    12.50 cents   13.73 cents
                                              ===========   ===========
   - Diluted                                  12.47 cents          n.a.
                                              ===========   ===========


1. Basis of Presentation

The Company was incorporated on 18th November, 1998 as an exempted company with limited liability in Bermuda under The Companies Act 1981 of Bermuda (as amended) and its shares have been listed on The Stock Exchange of Hong Kong Limited (the "Stock Exchange") with effect from 18th December, 1998.

Pursuant to a group reorganisation (the "Group Reorganisation") to rationalise the structure of the Group for the listing of the Company's shares on the Stock Exchange, on 2nd December, 1998, the Company issued shares in exchange for the entire issued share capital of Lerado Group Limited, the previous holding company of the Group, and thereby became the holding company of the companies now comprising the Group. Further details of the Group Reorganisation were set out in the prospectus of the Company dated 8th December, 1998.

The Group resulting from the above Group Reorganisation is regarded as a continuing entity. Accordingly, the comparative figures have been prepared on the basis as if the Company had always been the holding company of the Group.

2. Taxation

                                                    1999          1998
                                                 HK$'000       HK$'000
                                                               (Note 1)

The charge comprises:
Hong Kong Profits Tax
   Current period                                  1,566         1,000
   Overprovision in prior years (note)               (56)       (3,300)
                                                 -------       -------
                                                   1,510        (2,300)

Overseas taxation                                  4,580         4,476
Deferred taxation                                      -           (39)
                                                 -------       -------
                                                   6,090         2,137
                                                 =======       =======

Note: The overprovision of Hong Kong Profits Tax for the period ended 30th June, 1998 represented a reverse of tax provision made in previous years in respect of an offshore claim which was then finalised.

Hong Kong Profits Tax is calculated at 16% of the estimated assessable profit for the period.

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

3. Dividends

                                                    1999          1998
                                                 HK$'000       HK$'000
                                                               (Note 1)

Dividends paid by a subsidiary of the
   Company to its then shareholders
   prior to the Group Reorganisation
   described in note 1 above                           -        37,456

Interim dividend at HK3 cents per
   ordinary share                                 21,703             -
                                                 -------       -------
                                                  21,703        37,456
                                                 =======       =======

4. Earnings per Share

The calculation of the basic and diluted earnings per share is based on the following data:

                                                    1999          1998
                                                 HK$'000       HK$'000
                                                               (Note 1)

Profit attributable to shareholders               90,004        72,069
                                             ===========    ===========
Weighted average number of ordinary
   shares for the purpose of
   basic earnings per share                  720,000,000    524,740,602

Effect of dilutive potential ordinary
   shares in respect of share options          1,718,101              -
                                             -----------    -----------
Weighted average number of ordinary
   shares for the purpose of 
   diluted earnings per share                721,718,101    524,740,602
                                             ===========    ===========


The unaudited consolidated turnover for the six months ended 30th June, 1999 was approximately HK$618.5 million, representing a growth of 7.9% compared with the corresponding period last year. Our growth rate in profit attributable to shareholders was more encouraging, 24.9% over the corresponding period last year, making this period's figure amounting to approximately HK$90.0 million.

The Board declared an interim dividend of HK3 cents per share for the six months ended 30th June, 1999.

During the period under review, our net profit margin increased to 14.6%, compared with 12.6% of the same period last year. The main reason for this increase is our success in controlling costs. We enjoy economies of scale and higher bargaining power in dealing with suppliers by placing bulk orders. Since we are in good financial position, we were able to obtain cash discount from suppliers by early settlement. We also benefited from the drop in the market price of metal tubes, one of our major raw materials.

As in past years, the US remained our largest market, accounting for 74.5% of our total sales. From 1993 to 1997, the annual average growth rate of the US retail sales of juvenile products is approximately 6.6%. We believe that this growth trend will continue since late baby boomers are approaching their prime spending years and are spending more money on each child. Although today's families usually have fewer children than a generation ago, larger number of women having babies has compensated for the difference.

Another factor contributing to the market growth is the increasing household income with more women entering the workforce. Longer life expectancy also nurtures a group of grandparents who are generous on their grandchildren. In this kind of consumer environment, product quality, safety and reliability are more important than price. To cater for this market, we will continue to introduce innovative and value-added product features to win market share.

Sales to our second largest market, Europe, amounted to approximately HK$105.0 million, accounting for 17.0% of our total sales for the six months ended 30th June, 1999. It represents a 3.8% increase over the same period last year. Our products are price competitive to local European products. Some European strollers sellers, which mainly manufactured their own products in the past, now source from us for high quality but lower cost products.

In terms of new products, we developed battery operated ride-on cars last year on an OEM basis. The production of three models of battery operated ride-on cars carrying in-house design and the Group's own brand are expected to be launched before the end of 1999.

In a move to expand our office, we acquired a new office of saleable floor area of 6,000 sq. ft. in Shun Tak Centre for HK$37 million. The acquisition was partly financed by internal resources and partly by bank loan. We expect to move into the new office in October 1999.

As at 30th June, 1999, we have utilized approximately HK$12 million out of the net proceeds raised from the initial public offerings in December 1998 to purchase new equipment for the production of battery operated ride-on cars and to upgrade our existing production facilities. In addition, approximately HK$39 million was used for the repayment of bank loan.


Due to our competitive advantages, we see tremendous room for growth in the European markets and we intend to further increase our market share in Europe, especially for the baby stroller and bed markets. For our in-house designed battery operated ride-on cars, we will market the product, mainly to the US under our own brand name. We expect revenue inflow from this product category starting from the fourth quarter of 1999.

Based on our solid foundation in infant products, we will seek opportunities to further expand our product range to cover the market for pre-school children from the age of three to six.

As for markets outside North America and Europe, we are actively developing existing and new customer relationships in emerging markets. In the PRC, we are distributing strollers under our own brand name, "Angel". As we see very bright opportunities in this market, we will further expand our sales force so as to capture future growth.

With the continuous introduction of innovative products, we will explore new markets and consolidate our position in existing markets. We are fully prepared to capture the opportunities ahead to bring satisfactory returns for our shareholders.


As we approach the new millennium, the Group's Year 2000 preparations are nearly complete. The Group's compliance program and progress updates regarding Year 2000 compliance efforts have been disclosed previously in the 1998 Annual Report. The Group have already completed the modification and upgrading of certain equipments and software as planned. The rest of the systems are expected to be upgraded and modified to be Year 2000 compliant by the end of September 1999. A total of HK$2.3 million has been authorized for the project and is not expected to be exceeded.

The Directors will continue to monitor the operation of the whole system of the Group to ensure that operations will not be disrupted as a result of the Year 2000 issue. The Directors are confident that Year 2000 issue would not have any material impact on the Group's operations.


The Board has declared an interim dividend of HK3 cents per share in cash for the six months ended 30th June, 1999 to shareholders whose names appear on the Register of Members of the Company on 29th October, 1999. It is expected that the dividend warrants will be sent to the Shareholders no later than 10th November, 1999.


The Register of Members of the Company will be closed from 26th to 29th October, 1999, both days inclusive, during which period no transfer of shares will be registered. In order to qualify for the interim dividend, all transfers accompanied by the relevant share certificates must be lodged with the Company's Registrar, Secretaries Limited, 5th Floor, Wing on Centre, 111 Connaught Road Central, Hong Kong, not later than 4:00 p.m. on 25th October, 1999.


Neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company's shares during the period.

By Order of the Board
Huang Ying Yuan

Hong Kong, 8th September, 1999

Source: Lerado Group (Holding) Company Limited
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