Leeport (Holdings) Limited
(Stock Code: 0387)

Major Shareholder:

• Peak Power Technology Limited ¡V 68.6% interest

Company Subsidiaries:

• Leeport Machinery (Shanghai) (100%): Trading of machines tools and measuring instruments
• Leeport Electronics Limited (100%): Trading of electronic equipment
• Leeport Macao commercial Co (100%): Commercial and service agents, overseas selling activities, documentation etc
• Leeport (Malaysia) (100%): Distribution and repair of machine tools and accessories
• Leeport (Singapore) Pte Ltd (10%): Trading of machine tools and related products

The Group is principally engaged in the trading and the installation of machine tools and related products, which include metal cutting machinery, metal forming machinery, precision measuring instruments and cutting tools, product design equipment and education training machinery and software, and equipment for the electronics industry. During the Track Record Period, the Group did not engage in the manufacturing of machine tools and related products.

The Group currently represents 22 key suppliers spreading across various countries such as Japan, the US, Germany, the UK and Finland. For each of the three years ended 31 December 2002, approximately 45.5%, 59.6% and 57.5% respectively of the Group's total turnover was derived from suppliers with exclusive distribution arrangements.

The Group's products are distributed to over 4,200 customers located in the PRC, Hong Kong, Singapore, Malaysia and other Asian countries. The Group's customers include ASM Asia Limited, Dongfeng Honda Auto Parts Co. Ltd., Fong's National Engineering Co. Ltd., Luen Shing Holdings Limited and Lung Kee Metal Limited. For the year ended 31 December 2002, approximately 89.6% of the Group's turnover were derived from customers who have dealt with the Group for more than once.

The Group strives to provide high quality and professional technical services in order to fulfill its customers requirements. In January 2002, the Group received the certification of ISO9001: 2000 for its quality management systems. The Group's headquarters is located in Hong Kong with offices in the PRC, Singapore, Malaysia, Macau and Taiwan. In the PRC, the Group has offices in Beijing, Shanghai, Shenzhen and Chongqing.

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

• Capability to provide a wide range of products to cater for different stages of the manufacturing process
• Long tern business relationships with key suppliers
• Diversified customer base
• Professional marketing team and service engineers
• Established distribution network, in particular in the PRC
• Experienced management team

• Absence of long term contracts with its customers
• Reliance on suppliers
• Reliance on key management
• Forming strategic alliance in the form of joint ventures with the Group's suppliers
• Uncertainty of entering into new markets
• Loss of distribution arrangement with key suppliers
• Non-inclusion of a profit forecast

The Group will continue to identify and source for advanced products in order to ensure that its customers are provided with products featuring the latest technology. In addition, the Group will also continue to identify and source for products, which are complementary with its existing products to ensure a comprehensive distribution portfolio. The Directors believe that this will enhance the Group's competitiveness in this area. In achieving such diversification, the Group will recruit additional staff and service engineers.

The Group will seek opportunities to form strategic alliances with the suppliers of the Group with the aim of creating synergies with its existing businesses. The Directors intend to set up such joint ventures to capture additional businesses and to expand the distribution network of the Group in the PRC. The Group is in preliminary discussions with one of its suppliers to form a joint venture to engage in the distribution of their products in the PRC. As at the Latest Practicable Date, no formal agreement has been signed by the Group with such supplier. The Directors have confirmed that the Group in accordance with the Listing Rules will enter into any such transaction.

The Directors reckon that a strong corporate image will facilitate the sales and marketing of the products of the Group. The Group plans to strengthen its corporate profile and image through advertisements in trade magazines and billboards. The Group will also promote its expertise in the field of machine tools and related products through participation in trade exhibitions in the PRC, Taiwan and Southeast Asian countries as well as the organization of technical seminars and user training for its customers.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$28.0 million (based on the offer price HK$0.84 per share). The Group at present intends to apply the net proceeds as follows: