Major Shareholder:

• Mr. Zhang Peter. Y – 51.2% interest

Company Subsidiaries:

• GHMM (100%): Production and sale of Chinese pharmaceutical products, anti-tumor medicines, and western pharmaceutical products
• GHMR (50.0%): Research and development of Chinese and Western medicines
• GHXF (95.0%): Property holding

The Group is principally engaged in the research, development, manufacture, and sale of Chinese pharmaceutical products, primarily for women and the elderly. The Group is also engaged in the research, development, manufacture, and sale of naturally-sourced anti-tumour medicines and Western pharmaceutical products.

The principal market of the Group's products is the PRC. The Chinese pharmaceutical products manufactured by the Group include a broad range of Chinese herbal medicated products with different therapeutic functions for women such as "Yeosure Natural Medicine Lotion", "Yeosure Moistened Toilet Towel", and "Yeosure Puerperant's Health Drink." The Group's products under the "Yeosure" brandname are Chinese pharmaceutical products, as they are medical treatments for women's diseases with the principal ingredients being Chinese herbs.

The Group has established an extensive network of distributors, through which the Group's products are distributed to 29 provinces and municipalities in the PRC, including Guizhou, Tianjin, Hainan, Guangdong, Guangxi, Fujian, Hunan, Yunnan, Jiangxi, Zhejiang, Shanghai, Anhui, Hubei, Chongqing, Sichuan, Shaanxi, Henan, Jiangsu, Shandong, Shanxi, Qinghai, Xinjiang, Gansu, Inner Mongolia, Beijing, Hebei, Liaoning, Jilin, and Heilongjiang. It is a strategy of the Group to foster close working conditions with its distributors in order to take advantage of their distribution networks in the PRC.

In recent years, the Group has experienced significant growth in its business. For the year ended June 30, 2001, the Group's turnover and net profit from ordinary activities attributable to shareholders amounted to approximately HK$161 million and approximately HK$72.2 million, respectively. For the year ended June 30, 2002, the Group's turnover and net profit from ordinary activities attributable to shareholders were approximately HK$173.2 million and approximately HK$75.9 million, respectively.

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

• The extensive experience of the executive Directors and senior management in the pharmaceutical industry
• Its strong research and development capabilities which enable the Group to develop new and technologically advanced products
• Its extensive network of distributors that allows the Group's products to gain wide market coverage in the PRC
• Its comprehensive and stringent quality control standards and procedures
• The well established "Yeosure" brandname in the market of Chinese pharmaceutical products for women, which takes advantage of the stable and ample supply of high quality herbs at low costs in Guizhou Province
• Its effect research, development, and marketing of "Jin Xi Su", the Group's award-winning naturally-sourced anti-tumour medicine
• Its use of advanced equipment imported from Germany and Finland for the production of injection products

• Product concentration;
• Research and development;
• Reliance on key personnel;
• Reliance on distribution partners;
• Reliance on major suppliers;

The Group's mission is to become one of the leading pharmaceutical enterprises in the PRC, focusing primarily on research and development, manufacture, and sale of Chinese pharmaceutical products for women and the elderly, naturally-sourced anti-tumour medicines, and Western pharmaceutical products.3

The Group intends to establish closer ties with doctors in general, especially anti-tumour specialists, by organising and sponsoring professional conventions or seminars, with a view to promoting the Group's anti-tumour medicines through academic discussions and exchanges. The Group will regularly publish dissertations to publicise the Group's medicines for the treatment of cancer in carious medical journals in the PRC. In addition, the Group will also form its own team of consultants to liaise with anti-tumour specialists to ensure better understandings of the Group's anti-tumour specialists.

The Group aims to strengthen its research and development capabilities by setting up its in-house research centre in 2003 in Guiyang City, and will acquire advanced laboratory equipment and recruit highly qualified research professionals. The Group also intends to strengthen its strategic alliances and co-operation with foreign and PRC-based research institutes to engage in the research and development of new medicines and bio-pharmaceutical products and to provide training for the Group's technical staff.

It is crucial to structure the Group's sales and distribution network for the domestic market and to build up sales offices for the international market, in particular the Asia Pacific region, in a systematic and comprehensive manner, in order to increase the Group's sales in both domestic and international markets. As such, starting from the beginning of 2003, the Group plans to set up sales offices in ten major cities in the PRC and an international sales centre in Hong Kong towards the end of 2003.

To cope with growing market demands in the PRC pharmaceutical industry and the launch of the Group's new products, the Group plans to invest in a new production line at the Group's production complex in Xifeng County for the manufacture of pharmaceutical products in tablet form in accordance with GMP requirements.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$59.0 million (based on the offer price HK$0.80 per share). The Group at present intends to apply the net proceeds as follows: