BUSINESS REVIEW

For the year ended 31st Mar 2004 (1/4/2004-31/3/2005):

The Group's turnover decreased 1.4% to HK$ 942 mil. and the attributable profit increased by 30.8% to HK$ 134 mil. By excluding the gain on disposed of subsidiaries of HK$ 31 mil., the profit attributable to shareholders increased 1.8% to 102 mil.


COMPANY BACKGROUND:

1) The Group is principally engaged in the manufacture and sale of handbags, which are made of a wide variety of materials such as PVC, imitation leather, nylon and various types of textile materials.

2) The Group's products are manufactured either on an OEM basis for owners or licencees of brandnames or with the Group's own design. The Group's brandnames include Bag Kingdom and SuperSpeed.

3) All of the products of the Group are manufactured in the PRC, they are usually sold to the overseas importers and chain stores in various territories.

4) Production facilities:

a) Gao Bu Industrial Park in Dongguan: Products manufactured are mainly exported to the US market. Gross floor area of about 69,945 sq.m is wholly owned by the Group.

b) Liu Wu Industrial Park in Dongguan: Products manufactured are mainly exported to the European market. Gross floor area of about 22,634 sq.m is wholly owned by the Group.

c) Thailand factory in Kabinburi District: It commenced operations since Oct 1998 and was used for manufacturing of handbag products mainly for export to the US market. However, since the utilisation of the Thailand backup manufacturing plant may not be optimal for a certain period of time, the operation of the production facilities in Thailand have been supensed since Jul 2001.

5) Market

a) The US market is the largest market for the Group, and for each of the three years ended 31st Mar 2005, sales of the products of the Group to the US market amounted to appr. 77.8%, 78.1% and 75.1% respectively of the total turnover.

b) Europe is the Group's second largest market, and sales to Europe accounted for 18.9, 18.1% and 19.2% of the Group's total turnover for the respective periods above.

6) Customers: During the year, the aggregate sales attributable to the Group's five largest customers comprised approximately 50% of the Group's total sales and the sales attributable to the Group's largest customer were approximately 27% of the Group's total sales.

7) Purchases: The aggregate purchases during the year attributable to the Group's five largest suppliers were less than 30% of the Group's total purchases.

8) Future Plans and Prospects:

a) To further penetrate the US market by increasing its marketing efforts in the US market to capitalise on its existing customer network and experience in the market.

b) To strengthen its strategy of securing sales order directly from large chain stores and retailers in the US by expanding its marketing arm to handle direct sales orders.

c) To further strengthen its design and product development capabilities to produce more originally designed products and to place further emphasis on the design and marketing of high-end handbag products which command a better profit margin.

d) To upgrade its production facilities in the PRC, aiming to improve the production efficiency.

MAJOR EVENTS:

2002 Jan

- The Group newly listed in the Hong Kong Exchange Market by introduction from its major shareholder, Lee & Man Holdings Ltd. (0554).

SHARE CAPITAL HISTORY:

Date	Issue Price	Shares Issued	Remarks
2002 Jan		825,000,000 1 sh for 1	Lee & Man Hldgs Ltd.(0554)