Kamboat Group Company Limited
(Stock Code: 0318)

Major Shareholder:

• Mr. Wong Chi Man - 48.61% interest
• Mr. Wong See Sum - 14.64% interest

Company Subsidiaries:

• Kamboat Chinese Cuisine (100%): Operation of Chinese restaurants
• Kamboat Bakery Limited (100%): Bakery Operation
• Kamboat Trading Limited (100%): Trading of wine
• E-Sky Enterprises Limited (100%): Holding of trade marks

The Group is engaged principally in the provision of catering services and food production industry in HK through the operation of Chinese restaurants under the brandnames of Kamboat Chinese Cuisine (ª÷Às²î®üÂA°s®a) and Kamboat Chiu Chow Cuisine (ª÷Às²î»æ©±).

The Group at present operates five Chinese restaurants, four of which are operating under the brand name of Kamboat Chinese Cuisine and one under the brandname of Kamboat Chiu Chow Cuisine. The Group's Chinese restaurants offer a wide variety of Chinese dishes, dim sum and beverages. In order to sustain and enhance its competitiveness, the Group offers a wide variety of delicacies to meet the changing and different tastes of its customers.

The Group also produces and distributes bakery and other food products such as festive products, biscuits and desserts through it 23 bakery outlets under the brandname of Kamboat Bakery. For each of the three years ended 30^th April 2001, the turnover attributable to the sales of bakery and other food products was about HK$6 million, HK$17 million and HK$77 million respectively, representing 4%, 7% and 25% of the Group's turnover respectively during these period.

The Group has been focusing on customer sectors with more discerning tastes and relatively higher level of disposal income and as the young and educated working population, the middle class and entrepreneurs. The Chinese restaurants of the Group are located at Sheung Wan, Mongkok, Kwun Tong and Tsuen Wan, which the Directors believe are districts with dense pedestrian flow and relatively fewer competitors offering middle to high end new style Chinese cuisine with wide variety of innovative delicacies.

The Group focused on the customer sectors with young and educated, the Directors consider that these sectors of the population have a growth demand for high quality catering services. The Directors are optimistic of the growth potential of the Group as the change in demographic composition and pattern of consumption of the target customer are expected to create growing demand for high quality new style Chinese cuisine, which in turn, provide opportunities for the Group to further grow and develop its business in HK.

The Directors believe that the distinctive brand image of the Group enables it to capture and create market demand through its continuous introduction of new menus and launch of new products to the market. With a view to maintain the Group's image, renovation of the Group Chinese restaurants of the Group will be performed when the management consider that there is a need. In general, renovation takes place approximately every five years

To capture the market potential and establish recognition of its brandnames, the Group strategically locates its Chinese restaurants and bakery outlets at location with dense population and pedestrian flows. The Group is adopting the strategy of locating its Chinese restaurants in areas with relatively fewer competitors offering middle to high-end new style Chinese cuisine with wide variety innovative delicacies.

The Directors believe that the Group has the following competitive advantages:

• The menus of the Group's Chinese restaurants are reviewed and updated by the management of the Group on a regular basis, by taking into account of, amongst other factors, the market trend, seasonal factors, feedback from customers and idea inspired by international cuisine.
• In order to keep the chefs of the Group barest of the latest development in cooking techniques in other parts of the world, training courses tutored by chefs from overseas such as Taiwan and France have been provided to the chefs of the Group from time to time to enrich their ideas from the development of new menus and products.
• In order to keep the quality of food products, all inspection on finished and semi-finished bakery and other food products and its hygiene officer on a regular basis carries out semi-products on a sampling basis in the internal testing centre of the Group.
• All services staff are trained with the concept of quality services and given clear instruction for serving the customers through internal guidelines, regular in house training and proper on site supervision.

• Upon expiry of each of the leases of the Group's Chinese restaurants, bakery outlets and food production workshops, there is no assurance that the Group would be able to renew such lease agreements on terms acceptable to the Group be able to renew such lease agreements on terms acceptance to the Group.
• The relocation of the production workshops would adversely affect the bakery operation of the Group and may even cause temporary closing of the bakery outlets.
• The business and profitability of the Group's operations may, to a certain extent, be affected by the local restaurant and food retail business, which at turn is closely related to the general economic environment in HK.
• The Group operates its Chinese restaurant and bakery businesses in a highly competitive market with a large number of competitors, which include Chinese restaurant chains, bakery chains, individual Chinese restaurants.

The Directors consider that Hong Kong will experience a recovering economy since the Asian financial crisis 1997 and there will be an increasing demand for high quality new style Chinese cuisine with a wide variety of delicacies. With the capability to capture a growing market demand, the Director believe that the Group is well positioned to benefit from the business opportunities arising from the recovering economy of Hong Kong and the Change in demand of food catering services.

The Group plan to expand its market coverage by opening more new Chinese restaurants bakery outlets and distributing its bakery and other food products by franchising arrangements to further increase its market share in Hong Kong.

The Group tends to increase the distribution channel of its bakery and other food products such as mooncakes, cookies, beverages and convenience food in Hong Kong by distributing through department stores, supermarkets and convenient store chains to capitalize on the increasing recognition of the Group's brandnames and products.

The Group tends to expand its production facilities for bakery and other food products to the PRC to reduce costs of the Group.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$43.5 million (based on the offer price HK$0.50 per share). The Group at present intends to apply the net proceeds as follows: