Major Shareholder:

• Mr. Sun Shao Feng ¡V 67.5% interest

Company Subsidiary:

• Zhonglu (Fujian) Agriculture Comprehensive Development Company Limited (PRC) (100%): A vertically integrated fruit and vegetable grower and processor

The Group is a vegetable and fruit grower and processor in Fujian Province, producing and supplying fresh and processed vegetables and fruits primarily for Japanese customers whose business relationship with the Group commenced in as early as 1998. The Group's principal products can be categorised into fresh produce, processed products and pickled products. The Group takes a seasonal complementary approach in deciding the types of vegetables or fruits to be cultivated in its cultivation bases and adopts an end-to-end, vertically integrated approach to vegetable and fruit cultivation and processing.

The Group operates three processing factories and leases 19 vegetable and 4 fruit cultivation bases. The processing factories occupy approximately 16,990-meter squares gross floor area and the cultivation bases occupy approximately 26,800 mu of farmland in Fujin Province and Zhejiang Province.

The products of the Group are often produced according to the specific needs of its customers in Japan. The Group's sales to the Japanese market accounted for approximately 84%, 86%, 79% and 75% of the Group's total revenues for the three financial years ended 30^th April,2003 and two months ended 30^th June, 2003. The balance of the Group's revenue during the same period was made up of domestic sales and exports to other overseas markets, namely, the United Kingdom, the Philippines, Malaysia and Singapore.

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

• The Group takes a seasonal complementary approach as a result of which it enjoys advantage over fruit and vegetable growers in northern China and Japan in winter;
• The Group adopts an end-to-end, vertically integrated approach to vegetable and fruit cultivation and processing;
• The Group meets with its customers with a view to exchanging know-how in respect of cultivation and processing techniques on a regular basis. Such information exchange offers the Group the opportunity to learn and make use of developments in Japan;
• Its sales-driven cultivation and production planning enhances the efficiency of production, helps maintaining a stable supply of products and minimizes unnecessary costs being incurred as a result of excessive production; and
• Its strategically located production bases will shorten the shipment time, thereby maintaining the freshness of the products;

• Heavy reliance on the sales to a few major customers of the Group and on the Japanese market;
• In the event the PRC government abolishes the preferential ELT Treatment to the Group, the Group's effective tax rate may change and the Group's financial position may be adversely affected;
• The level of demand for the Group's products is susceptible to seasonal changes in its overseas markets; and
• The Group has marketed and sold its products in the PRC using "Zhonglu" and "Green Kee" as its brand names, which the Group has registered as trademarks in the PRC. They are not registered elsewhere.

The Group plans toe expand the range tand type of its products to include quick frozen fruits and vegetables, fruits and vegetables juice and dehydrated fruits and vegetables. The Group seeks to provide more varieties off products and to diversify the Group's customers base. In addition, the new products will allow fruit and vegetable produce of different quality to be utilized production process can be minimized.

To reduce the risks associated with the concentration of the Group's existing processing facilities and cultivation bases in Fujian Province, the Group plans to extend its cultivation bases and production facilities to other provinces in the PRC. The Group has established a cultivation base and processing facilities in Zhejiang Province in the second half of 2002 and the Group plans Shandong Province in the near future.

In order to improve operational efficiency, the Group plans to upgrade the existing production facilities and acquire new equipment. The group plans to upgrade and increase the capacity of existing refrigeration storage to cope with the increase in production volume in the future. In addition, the Group plans to build greenhouses and protective covers over selected production bases and to improve their existing irrigation systems.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$173million (based on the offer price HK$1.28 per share). The Group at present intends to apply the net proceeds as follows: