Major Shareholder:

• Chow Tai Fook Enterprise Ltd ¡V 37.5% interest
• Mr. Thomas Lau and Mr. Joseph Lau ¡V 37.5% interest

Company Subsidiaries:

• Everwin (100%): Property holding
• Grand Kinetic (100%): Property holding
• Superite (100%): Property holding
• Sogo HK (100%): Departments store operator
• Forceworld (100%): Property holding
• Excellent Global (100%): Party to the PRC JVs Acquisition Agreement
• Asia Kinetic (100%): Daison Land Ten-Dollar Shop operator
• Roson Kwok (100%): Property management

The Group is engaged principally in the operation of ¡§lifestyle¡¨ department store and other retail outlets. The Group owns most of the properties at which its department store is situated. To the Group. ¡§Lifestyle¡¨ department store is characterized by the ¡§one-stop-shop¡¨, ¡§shops-in-shop¡¨, ¡§Japanese style¡¨ and ¡§customer oriented¡¨ concepts, which offers quality goods and services, customer convenience, comfortable and pleasurable shopping environment. In addition, goods offered at the Group's ¡§Lifestyle¡¨ department store range from daily necessary to luxury products for meeting the needs of the ¡§Lifestyle¡¨ of a typical consumer in a modern society. At present, the Group operate the Sogo Store, Nufront and Daiso Land Ten-dollar Shop in Hong Kong.

The Group has been granted the sole and exclusive license to use the Sogo Trademark in relation to the retail department store business operated, and the merchandise, supplied and sold by reference to the said trademark in Hong Kong. Since completion of the Sogo HK Transaction May 2001. Sogo HK was granted the license to use the Sogo trademark for a period of 18 years from Sogo Co. Ltd. Sogo Store offers a wide range of merchandise, which can be broadly categorized into apparels and fashion, cosmetics and accessories, household, toys and others and food and confectionery. Merchandise is sold by means of the Group's direct sales as well as concessionaire sales.

Sogo Store is located at the prime-shopping district in Causeway Bay, Hong Kong. The sore currently occupies a total gross floor area of about 364,419 sq.ft, about the 95% of which is owned by the Group. The Directors believe that Sogo Store is one of the largest individual department stores in Hong Kong in terms of floor area by location. As to the other retail formats, the Group operates (1) Nufront, a Japanese-style shopping centre serving the young trendy customers; and (2) Daiso Land Ten-dollar shop, a ten dollar shop offering a variety of quality budget items.

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

• The extensive experience of the team in operating the Sogo Store as a lifestyle concept based department store in Hong Kong and its ability to cope effectively in a dynamic retail environment, particularly during the economic recession period in Hong Kong after the Asian financial crisis started in 1997;
• The prime location of the Sogo Store as one of the landmarks of the prime shopping district in Causeway Bay, Hong Kong, thereby attracting a steady flow of visitors and customers from various age group, income group. Preferences and origins;
• Its immunity to rental fluctuations and flexibility to renovation arrangements as the Group owns most of the properties in which the Sogo Store is situated;
• The comprehensive range of quality merchandise, especially well-known brands, offered for sale in the Sogo Store; and
• Its ability to influence the product mix of the merchandise offered by the Sogo Store.

• Reliance on the Hong Kong market
• Ability its anticipate and foresee changing consumer demands
• Competition
• Sustainability of growth
• Reliance on key management personnel
• Reliance on the Sogo trademark
• Reliance on concessionaires
• Breach of deed of mutual covenant, licenses, rules and regulations by the Group's concessionaires

As an initial step to enter into the PRC market, the Group targets to be one of the first movers in terms of a foreign enterprise with a controlling stake in the operation of a department store in the PRC. The Group entered into the PRC JVs Acquisition Agreement on 30th March 2004 to effectively acquire interest in two joint venture companies in the PRC, the Property JV and the Operating JV. Consideration is subject to a cap of HK$500 million and will be satisfied by part of the net proceeds of the Share Offer. The Property JV owns the shopping Complex, a property in Shanghai with a gross floor area of about 886,113 sq.ft and it is proposed that the Operating JV will operate a department store in the Shopping Complex under the name of ¡§Ongoing Department Store¡¨. Operation of the department store is expected to commence in mid 2004.

The Group will continua to actively review its operating strategy to encounter the change in economic conditions and market competition, in particular, in the area of sales mix between direct sales and concessionaire sales. At present, the Group places emphasis on concessionaire sales as it significantly reduces inventory risks of the Group, which the Directors believe to be one of the key factors to the Group's success during the downturn of the HK economy. Along with the sign of economy turnaround. However, the Directors have plans to increase direct sales that will enhance the overall profitability of the Group. Different alternative will be explored to increase its direct purchase merchandise including sourcing directly from manufacturers, developing its own brand name goods/products and introducing new overseas brands.

Further, the Directors intend to renovate 11/F to 16/F of East Point Centre (New Wing) of an aggregate gross floor area of about 55,390 sq.ft. Which is currently held by the Group for occupation and investment purposes, and to expand the Sogo Store to house a lifestyle service centre comprising bookshop, spa centre, facial treatment centre, hair beauty salon and refreshment lounge, etc. It is a step towards enhancing the ¡§one-stop shop¡¨ department store concept. As part of the pilot plan for the expansion of the Sogo Store's range of services, a portion of the 19^th Floor of the New Wing owned by the Group was renovated into temporary facial treatment centre for some of the cosmetic concessionaires of the Group since February 2004.

The net proceeds from the share offering, after deducting the related expenses, are estimated to amount to approximately HK$1,429 million (based on the offer price HK$8.3 per share). The Group at present intends to apply the net proceeds as follows: