Major Shareholder:

• Ocean Grand Group (1220) ¡V 75.0% interest

Company Subsidiaries:

• Kenlap P.G. C. Manufacturer Co.,Ltd (100%): Trading and manufacture of Gold Salt in Hong Kong
• Kenlap Fine Chemical (Zhuhai) Technology Ltd (100%): Production and processing of Silver Salt, Palladium Salt and Rhodium Sulphate in the PRC
• Kenlap Chemicals Ltd (100%): Sales and marketing of electroplating chemicals in the PRC and HK

The Group principally engages in the processing, production and trading of Electroplating Chemicals in the PRC and Hong Kong. The provision of Palladium Salt processing and subcontracting services to its customers in the PRC is performed through the Zhuhai Plant located in Nan Bing Technological and Industrial Park, Zhuhai City, the PRC and cooperation with CCRI respectively. During the Track Record Period, the Group offered Palladium Salt subcontracting services through the production facilities of CCRI. The Zhuhai Plant has commenced its operation since January 2003, the production technologies and facilities are directly licenced and acquired from CCRI. Under the business plan of the Group, these Palladium Salt processing services which are initially provided by CCRI will gradually be taken up by the Zhuhai Plant. Apart from Palladium Salt, the Zhuhai Plant also engages in the processing of Silver Salt and Rhodium Sulphate.

Currently, the Group has a maximum annual production capacity of about 7,000 kg of Gold Salt, 160,000 kg of Silver Salt, 6,000 kg of Palladium Salt and 200 kg of Rhodium Sulphate. As at the Latest Practicable Date, the Zhuhai Plant was not working at its full capacity and for the month ended 30 April 2003, the production and processing capacity of the Group was 270 kg of Gold Salt, 8,600 kg of Silver Salt, 240 kg of Palladium Salt and 14 kg of Rhodium Sulphate.

As at the Latest Practicable Date, the Group has approximately 90 active customers, comprising 84 for its sale of Electroplating Chemicals and 6 for its subcontracting business respectively. For the subcontracting business, the Group's customers are mainly chemical distributors. For the Electroplating Chemicals sales businesses, the Group's customers are mainly electroplating service providers, watches and clocks manufacturers, jewellery manufacturers and printed circuit board manufacturers. According to a report from Hip Cheong Hong Ltd., a precious metals consultant in Hong Kong, the brand name of the Group, Kenlap, is a well-known brand name in the industry. Leveraging on its proven track record in the Electroplating Chemicals industry and established business relationships with its major customers, the Directors believe that the Group has competitive advantages in further developing its business in the PRC and Hong Kong.

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

• Proven track record in the electroplating Chemicals industry;
• Established business relationship with its major customers
• Experienced and dedicated management team;
• Strategic alliance with CCRI;
• Flexible production and delivery systems;

• Reliance on CCRI
• Credit risk
• Reliance on key management
• Possible infringements of the Group's trademark
• Storage and usage of dangerous substance
• The Group will continue to face intensive competition

The Group's primary objective is to enhance its position as a supplier of high quality and value-for-money Electroplating Chemicals in the PRC and Hong Kong through continual business expansion and strengthening of the Group's competitive position. To achieve this business objective, the Directors plan to implement the following strategies:

Leveraging on its strategic cooperation with CCRI and its existing customer base, the Group intends to broaden its scope of products to satisfy the changing needs of the Group's customers arising from their business expansion and changing market demand.

The Directors believe that the Group can strengthen its competitiveness through its valueadded services such as providing technical advice on electroplating process and use of Electroplating Chemicals. In addition, as the selling price of Electroplating Chemicals changes daily correspondingly with the precious metals market, the Group also provides updated metals market information to customers to enable them to optimise their inventory management.

The Group's current production technology was acquired from CCRI. For the Group's long-term benefit and business development, the Group plans to nurture its own R&D capabilities on product enhancement and product development by establishing a R&D team in Zhuhai. Through cooperation with CCRI and other research institutions in the PRC and Hong Kong, the R&D team of the Group will focus on the development of new chemical products, as well as improvement of production efficiency and product quality. The Directors expect that the Group will start its own R&D activities in the third quarter of 2003.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$55.0 million (based on the offer price HK$0.88 per share). The Group at present intends to apply the net proceeds as follows: