Major Shareholder:

• HKR International Limited (0480) ¡V 49.0% interest
• The Cha Family - 25.8% interest

Company Subsidiaries:

• Hanison Construction Co. Ltd. (100%): Construction business
• Hanison Contractors (100%): Construction business
• Hanison Interior & Renovation Ltd. (100%): Interior & renovation business
• Trigon Building Materials Ltd. (100%): Building materials business
• Ng Tai Kee Co. Ltd. (100%): Building materials business
• Hanison Concrete Ltd. (100%): Building materials business
• Hamfield Enterprises Ltd. (100%): Property holding
• Heatex Ceramic Ltd. (100%): Property holding

The Group is principally engaged in the business of building construction, interior and renovation works, and supply and installation of building materials in Hong Kong. The Group has been engaged in the construction business in Hong Kong for approximately 12 years, undertaking both building construction and design-and-build projects. While the Group focuses primarily on the construction of residential, office and industrial buildings as well as factories, it has also built shopping centres and recreational facilities. In addition, the Group has undertaken the construction of a golf club and infrastructure facility, together with the related site formation works including piers, roads and drainage.

The Group's interior and renovation business involves the maintenance, decoration, renovation and refurbishment of institutional, public and private buildings. The line of business complements the work of the Group's construction business by providing to it supplementary fitting-out services.

In terms of its building materials business, the Group specializes in the supply and installation of interior products such as timber flooring, lightweight concrete infill walls, false ceilings and kitchen cabinets; the supply of pipes, in particular galvanized pipes and black pipes; and the production and sale of concrete.

According to the survey of construction output by the Government, the total gross value of construction work performed by main contractors in Hong Kong has grown from approximately HK$67.7 billion in 1992 to approximately HK$122.1 billion in 2000, which represents a compound annual growth rate of approximately 7.6% during that period.

A majority of construction works are conducted on sites (about 76% in 2000), whilst the remainder comprises minor new construction activities and renovation works at erected buildings and structures, as well as electrical and mechanical fitting works.

On an analysis based on the types of work, private sector construction sites accounted for approximately 31% and public sector construction sites accounted for approximately 40% of the total value of construction works in the first quarter of 2001, with the remaining 29% being non-site works.

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

• It¡¦s established reputation as a provider of quality products and services in the construction industry in Hong Kong.
• Its diversified experience and proficiency in the construction field, particularly with low-rise residential buildings, communal infrastructure (such as roads, site formation, drainage, schools and bus terminals) and design-and-build works.
• Its capability in providing an integrated and comprehensive range of construction-related services and products which range from project design and planning to supply and installation of building materials and interior and renovation works.
• Its ability to select appropriate subcontractors, procure raw materials and estimate competitive budgets and feasible time frames in the tendering process.

• There is no assurance that the Group's expectation will materialize and the reliance on the HKRSI Group will be reduced.
• Reliance on major subcontractors and suppliers and these major subcontractors and suppliers differ every year and the Group has not entered into any long-term subcontracting and supply contracts with any of them.
• The construction and construction-related businesses in Hong Kong are becoming increasingly competitive as a result of the high volatility of the property market in Hong Kong in recent years, leading to difficult operating environments.

The Group will continue to establish new business relationships with independent third parties. In addition, the Group will also continue to actively pursue new business opportunities through ad-hoc joint-venture arrangements with third parties in tendering for building projects.

Currently the Group is one of the main agents in Hong Kong for the supply of certain innovative and environmentally friendly building materials such as infill wall system, polyboard and engineering flooring. In order to maintain such positive market position, senior management responsible for the Group's building materials business will continue to monitor closely the market trends so that the Group can be amongst the earliest to benefit from any new innovations.

Through the implementation of its future plans, the Directors anticipate that the proportion of the Group's transactions directly involving the HKRI Group will gradually fall to below 50% of its turnover by the year ending 2003. The Directors are confident that with the Group's established reputation in the construction industry in Hong Kong and its strong financial resources, the Group will continue to be an active force in the construction industry in Hong Kong.

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