Principal activities are the manufacture and distribution ofstrollers, car seats, boosters, beds and playards and etc; retailing of milk powder, diapers, nursery products, food, apparel, strollers and etc; and manufacture and distribution of nursery and medical care products and etc.

Business Review - For the year ended December 31, 2009

The Group reported consolidated turnover of HK$1,291.8 million for the year ended 31 December 2009 (2008: HK$1,490.9 million) representing a decrease of 13.4% over last year. The profit attributable to equity holders of the Company increased by 23.4% to HK$70.2 million (2008: HK$56.9 million). Basic earnings per share increased from HK7.83 cents to HK 9.65 cents.

During the year, due to the contraction in demand led by the global financial recession, the revenue of the Group for the year decreased by 13.4% to HK$1,291.8 million. Sales to US came down by 8.0% and Europe dropped by 19.1%. During the year, the Group’s retail business in the PRC recorded remarkable growth with the sales amounting to HK$55.1 million representing to 4.3% of the Group’s revenue (2008: 1.1%). Compared to last year, the overall gross profit margin improved from 21.9% to 26.9%. The improvement was mainly attributable to the product mix enhancement and ongoing reductions in production costs. During the year, the Group has successfully launched a series of new models which carried higher margins. This achievement was mainly due to great contribution brought from the Group’s research and development (“R&D”) and sales teams. The Group also achieved substantial reductions in production costs with the implementation of numerous contingent cost control and streamlined manufacturing measures.

Due to expansion of the Group’s retail business in the PRC, both its marketing and distribution costs and administrative expenses increased during the year. The weight of marketing and distribution costs to revenues increased from 7.4% of the last year to 9.7% in 2009. The weight of administrative expenses to revenue increased from 7.4% last year to 8.1% in 2009.

Compared to last year, the Group’s R&D costs increased by approximately HK$2.6 million. The weight of R&D costs to revenues increased from 3.0% of the last year to 3.6% in 2009. Recognizing the importance of the ability to continuously develop advanced products to meet the market needs, we invested more resources in product innovation and enhancement during the year. The Group accelerated the pace of technological and product development during the year. We have started several product development projects to respond to increasing customers’ needs.

Revenue from retail business of the Group amounted to approximately HK$55.1 million, whereas the operating loss was HK$28.7 million. The Group has proactively explored the PRC market during the year. As at 31 December 2009, the number of shops under direct operation was 46. During the year, the Group reviewed the locations and total number of shops and then implemented strategic adjustments for different territorial areas by opening and closing retail shops. The adjustments resulted in a one-off expense of shops closure. The operating loss was mainly attributable to a number of proactive investments made by the Group during the year, which included increase in manpower and enhancement of operating facilities. The Group has already implemented various policies with the aim to promote operating efficiency and effectiveness and the result was satisfactory.

Source: Lerado Group (Hldg) (01225) Annual Results Announcement