Major Shareholder:

• Mr. Cheng Kwok Woo ¡V 21.73% interest
• Mr. Cheng Kwok Cheong ¡V 21.73% interest
• Ms. Cheng Wai Ying ¡V 21.73% interest

Company Subsidiaries:

• Fook Cheong Ho International Ltd (100%): Trading
• PME International Company Limited (100%): Trading
• PME Industrial Limited (100%): Manufacturing and trading
• Dongguan PME Polishing Materials & Equipment Co., Ltd(100%): Manufacturing and trading

The Group is principally engaged in the manufacturing of polishing compounds and polishing wheels in the PRC under its own brand name ¡§Pme¡¨ and the trading of different types of industrial abrasive products in Hong Kong and the PRC.

The polishing compound and polishing wheels are used for industrial polishing and shining of different metallic and non-metallic products. The Group's polishing compounds are manufactured according to specific in-house designs for the polishing of different metallic or non-metallic products to achieve finishing of various colours and brightness. The polishing wheels are made of selected fabrics of various styles and sizes, making them suitable for different finishing purposes.

The Group also trades in different abrasive products, including bonded abrasive products, coated abrasive products, non-woven abrasive products, and various other abrasive products. All of these products are mainly supplied to markets in Hong Kong and the PRC. The other abrasive products traded by the Group, such as dry tumbling materials, mainly include grinding paste, polishing paste, shining paste, hard compound impregn, and wooden chips.

The Group also provides technical consultancy services to assist its customers in the application of the Group's products. In 2002, the Group established a technical application centre in Dongguan PME to provide training, testing of new products, and various after-sales services to its customers.

The Group's production is carried out at its production plant in Humen Town, Dongguan City, Dongguan Province, which has a total site area of approximately 61,000 sq.m. and a gross floor area of approximately 45,000 sq.m. As at the Latest Practicable Date, the Group employed approximately 300 full-time employees of which approximately 200 employees are engaged in production operations and approximately 100 employees are engaged in the general operations and administration of the Group.

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

• Extensive experience in the manufacturing of abrasive products
• Consistency of quality of its products
• Long-established customer relationships
• Sourcing of raw materials from the PRC at a low cost
• Established network of marketing resources and distribution
• The ability of the Group to provide ¡§one-stop services¡¨ including the production and distribution of a wide range of polishing products

• Reliance on key personnel;
• Reliance on major suppliers;
• Reliance on the Asian markets;
• Sustainability of profit margin;
• Fluctuations of turnover;
• Competition;

The business strategy of the Group will be to continue to focus of the manufacturing and trading of industrial abrasive products in Hong Kong and the PRC. Following the PRC's accession to the WTO in 2001, the Directors expect that the demand for industrial products in the PRC will increase, which in turn will increase the demand for the abrasive products of the Group. The Directors believe that expansion of the PRC market will expedite the growth of the Group and is, therefore, planning initially to set up a representative office in Shanghai to promote the Group's products to PRC customers.

The Group will continue to dedicate resources towards the innovation of new products with a view to satisfy different market needs and to achieve an internationally recognised standard of polishing materials. The Directors also aim to enhance and strengthen the reputation of the Group's ¡§Pme¡¨ branded products in the PRC and overseas markets through promotion and participation in trade fairs.

The net proceeds from the placing and public offering, after deducting the related expenses, are estimated to amount to approximately HK$23.4 million (based on the offer price HK$0.25 per share). The Group at present intends to apply the net proceeds as follows: