09:52 LERADO GROUP<01225> - Announcement (2) infant products, toys and other products of Lerado China, Taiwan Company and Lerado Overseas to Holy Baby; and (ii) the expected growth in the sales of Holy Baby in view of its plans of expansion and strategies to increase its promotional activities which would result in greater demand for the products under the Master Agreement 2. LISTING RULES IMPLICATIONS Holy Baby is wholly owned by the brother of Mr. Huang Ying Yuan who is a Director and a substantial shareholder of the Company. Under Rule 14A.11(4) of the Listing Rules, Holy Baby is considered a connected person of the Company. Accordingly, transactions between each of Lerado China, Taiwan Company and Lerado Overseas and Holy Baby will constitute connected transactions of the Company under the Listing Rules. The Continuing Connected Transactions under the Master Agreement constitute exempted connected transactions for the Company under Rule 14A.34 of the Listing Rules and will be subject to reporting and announcement requirements under Rules 14A.45 to 14A.47 of the Listing Rules. Apart from the 2 lease agreements entered into with Huang Ying Yuan and his associate in the PRC in 1997, details of which have been disclosed in the Company's prospectus dated 8 December 1998, the only other connected transactions entered into between the Company and Mr. Huang Ying Yuan and his associates are set out below which fell within the de minimis exemption under Rule 14A.33(3) of the Listing Rules: Estimated Amount for the financial year ended Name of Address of Nature of 31 December Party premises Transaction 2004 (HK$) Yojin Industrial No. 22 Kuang Fu Road, Rental expenses paid by 848,000 Corporation Chia Tai Industrial the Group in respect (Note) Zone, Tai Pao City, of office and Chia Yi County, workshop premises Taiwan in Taiwan Huang Chen Li No. 99-F, Fu Chou Rental expenses paid by 28,000 Chu (Note) 7th Street, Chia Yi the Group in respect County, Taiwan of office premises in Taiwan Note : Huang Ying Yuan and Huang Chen Li Chu have beneficial interests in Yojin Industrial Corporation. Huang Chen Li Chu is the spouse of Huang Ying Yuan. Holy Baby has been purchasing infant products, toys and other products agreed by the parties from Lerado China, Taiwan Company and Lerado Overseas since 1 April 2004.For the year ended 31 December 2004, sales of infant products, toys and other products agreed by the parties of Lerado China, Taiwan Company and Lerado Overseas amounted to approximately HK$4.33 million respectively. The Company, not having previously issued a public announcement concerning the Continuing Connected Transactions for 2004, has inadvertently failed to comply with the requirements under Chapter 14A of the Listing Rules. The Company was not aware of the fact that the Continuing Connected Transactions for 2004 should have been subject to the reporting and announcement requirements under Rules 14A.45 to 14A.47 of the Listing Rules. The Stock Exchange reserves the right to take disciplinary action against the Company and the Directors in this respect. The Company had convened a meeting of the Board on 7 April 2005 to brief the Directors the requirements under the Listing Rules in connection with connected transactions. During the meeting, each of the Directors was given a copy of materials setting out the definition of connected transaction and the requirements in connection therewith in the Listing Rules. The Board believes that the steps taken by the Board would be sufficient to ensure that the Directors would closely monitor all the circumstances of similar transactions and that such breaches of the Listing Rules will not occur in the future. 3. REASON The Directors consider that the Continuing Connected Transactions are of the type that are entered into in the ordinary and usual course of business of each of Lerado China, Taiwan Company and Lerado Overseas and on a regular basis. The terms of the Master Agreement were reached between the parties by arm's length negotiation, on normal commercial terms and are no less favourable to the Company than those available to independent third parties. The price will be determined according to (i) direct comparable prices offered by the Group to other third-party