Major Shareholder:

• Mr. Han Jingyuan ¡V 45.8% interest
• Ms. Chen Ningning & Ms. Lu Hui ¡V 29.2% interest

Company Subsidiaries:

• Jinxi Limited (PRC) (97.6%): Production and sales of billets and strips.

The Group is a steel manufacturer in the PRC principally engaged in the production and sales of billets and strips. The Group was one of China's 500 largest enterprises in 2002 in terms of turnover and one of the fastest growing of these 500 enterprises in terms of growth in turnover and profit, according to ¡§A Report on the Development of Chinese Enterprises (2003)¡¨ jointly prepared by the China enterprise Confederation and the China Enterprise Directors Association and published by Enterprise Management and Publishing House in 2003.

In recent years, China's economic growth has led to an increasing demand for steel products. The Group was able to take advantage of the growth in China's steel market by selling almost all of our products in the domestic market. In 2002, the Group sold approximately 954,000 tonnes of billets and approximately 566,000 tonnes of strips. Most of the customers are downstream steel manufacturers who further process the billets and strips into downstream steel products such as angles, rebars, wire rods and pipes, which are largely used in the construction industry and for the manufacturer of machinery.

The Group conducts the production activities at a single production site in Qianxi County, Tangshan City, Hebei Province, China. the steel production facilities consist of a sintering/palletizing plant, an iron smelting plant, a steel making plant and a steel rolling plant. Based on the current production capacity, which the Group recently expanded, the Group is able to produce approximately 3.1 million tonnes of steel products per year.

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

• The position as one of the largest suppliers of billets in a fast growing market
• The operating efficiency and low cost structure
• The access to reliable iron ore supply
• The broad and stable customer base
• The experienced and highly incentivised management team

• Future economic downturns and cyclical fluctuations in the PRC steel industry and the customers industries may depress market demand for and prices of the products.
• The profit margins and the operating result may be adversely affected by increases in the price of raw materials or any shortage of raw materials supplies.
• The Group rely on single production site; any interruptions in the operations of the plants situated on this site would prevent us from producing steel and generating any revenue.
• The interests of Wellbeing holdings and Smart Triumph, the substantial Shareholders, may differ from each other and from the interest of the Group or the other Shareholder.
• The Group may not maintain sufficient insurance coverage for the risks associated with the operation of the business.
• The Group may rely on the continued patronage of the principal customers for the recurring income, loss of any of the principal customers could adversely affect the sales revenue.

The Group plan to expand the annual production capacity from approximately 3.1 million toones of steel products to approximately 4.0 million tonnes by undertaking certain expansion, major upgrades and technical renovation of the production facilities. The Group believe the upgrade and expansion will not only enables us to take advantage of market demand, but also further reduce the unit production costs by achieving greater economies of scale.

In order to enable the business to generate higher profit margins, the Group plan to diversify the product base and improve the product mix by manufacturing and selling higher margin, higher valued-added steel products, such as mid with strips and H-section steel, that are subject to less competition and offer greater versatility. The Group is constructing a new steel rolling line to produce mid width strips.

The Group believe that a prudent financial profile will enable the Group to protect the busines in any future industry downturn. The Group plan to continue to improve the financial practices and to leverage the financial strength the Group has received through careful management of capital expenditures, cash flows, leverage and coverage ratios. Following the Global Offering, the Group will maintain a reasonable capital structure that is in line with the industry norm and practice in China. The Group plan to actively manage the accounts receivable and inventory positions to enhance liquidity, maintain reasonable current ratio, reduce debt level and improve profitability.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$1,600.2 million (based on the offer price HK$2.425 per share). The Group at present intends to apply the net proceeds as follows: