The Directors of Herald Holdings Limited ("Company") announce that the unaudited consolidated results of the Company and its subsidiaries ("Group") for the six months ended 30th September, 1997 are as follows:-

Notes:

(1) The calculation of earnings per share is based on the profit after taxation and minority interests of $11,588,000 (1996:$6,516,000) and 627,151,000 shares (1996: 609,627,000 shares), which represent the weighted average number of shares in issue during the period.

(2) Fully diluted earnings per share are not shown for the period as the dilution is not material.

(3) Hong Kong profits tax is calculated at the rate of 16.5% (1996:16.5%) 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 shareholders for the six months to 30th September, 1997 amounted to $557,703,000 and $11,588,000 respectively. These represent an increase of 7% and 78% respectively as compared with the corresponding period in the previous year. The increase of the net profit was due in part to better results of the associated companies and contributions of the minority interests.

During the period under review, the toy division performed well and had a healthy recovery in its turnover and profitability compared to the same period last year. The division has lowered its profit margins and as a result, has been successful in obtaining more sales orders from its customers.

Both the houseware division and the timepiece division have successfully broadened their customer base and product range. The timepiece division has received very favorable response for its newly acquired timepiece licenses for "Head", "Mickey for Kids" and "The Spice Girls".

The computer head division had a difficult half-year due to declines in business for metal heads and thin-film heads. Quarter-inch-cartridge ferrite heads remained fairly strong. The division has been successful in developing higher-end head products such as the half-inch ferrite heads and new generation thin-film heads. Some of these new products have been produced at a low rate in the first half of the financial year.

In spite of the current uncertainties in Asian currencies, stock markets and the economic climate in Hong Kong, the directors believe that the results of the Group will be unaffected. The Group maintains a net cash surplus position and , in the absence of any unforeseen circumstances, the directors are confident that growth of the Group's profits for the whole year can be sustained.

DIVIDENDS

The Directors have declared an interim dividend of 1 cent per share (1996: 1 cent). The total amount of dividend payment of $6,552,000 was based on the total number of shares in issue as at 12th December, 1997 being the latest practicable date prior to the announcement of the interim results. Dividend will be payable on 20th January, 1998 to shareholders registered in the Register of Members on 2nd January, 1998.

REGISTER OF MEMBERS

The Register of Members will be closed from 31st December, 1997 to 2nd January 1998, 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 p.m. on 30th December, 1997 in order that they may receive their dividend entitlement.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES

During the period, the company repurchased a total of 130,000 of its shares on The Stock Exchange of Hong Kong Limited, all of which were then cancelled. The premium paid on repurchase was charged against share premium in accordance with the Companies Act 1981 of Bermuda (as amended). Details of the shares repurchased are as follows:

COMPLIANCE WITH THE CODE OF BEST PRACTICE

The Company has complied throughout the period with the Code of Best Practice as set out by The Stock Exchange of Hong Kong Limited in Appendix 14 of the Listing Rules.

George Bloch
Chairman

Hong Kong, 16th December, 1997

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