<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

         For the Quarterly Period Ended March 31, 2003

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

         Transition Period From ______________ To ______________

Commission file number:   0-31153


                               AP HENDERSON GROUP
             (Exact Name of Registrant as Specified in Its Charter)




            NEVADA                                               88-0355504
--------------------------------                            --------------------
(State or Other Jurisdiction of                               (I.R.S. Employer
  Incorporation or Organization)                             Identification No.)


          600 WILSHIRE BLVD., SUITE 1252, LOS ANGELES, CALIFORNIA 90017
          -------------------------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

                                 (213) 538-1203
                                 --------------
                          Registrant's Telephone Number


Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined by Rule 12b-2 of the Exchange Act): Yes [ ] No [X]

As of May 19, 2003, the registrant had 45,000,002 of its common stock
outstanding.

<PAGE>

                               AP HENDERSON GROUP

                      QUARTERLY REPORT ON FORM 10-Q FOR THE
                      QUARTERLY PERIOD ENDED MARCH 31, 2003


                                      INDEX
                                      -----

                                                                            PAGE
                                                                            ----

PART I  FINANCIAL INFORMATION

Item 1.  Financial Statements

         Balance sheets as of March 31, 2003 (unaudited) and December 31,
           2002................................................................3
         Statements of income for the three months ended March 31, 2003
           and 2002 (unaudited)................................................4
         Statements of cash flows for the three months ended March 31, 2003
           and 2002 (unaudited)................................................5
         Notes to financial statements (unaudited).............................6

Item 2.  Management's Discussion and Analysis of Financial Condition
            and Results of Operations..........................................8

Item 3.  Qualitative and Quantitative Disclosure About Market Risk............12

Item 4.  Controls and Procedures..............................................12

PART II OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds............................13
Item 4.  Submission of Matters to a Vote of Security Holders..................13
Item 6.  Exhibits and Reports on Form 8-K.....................................13

SIGNATURES....................................................................14

                                      -2-
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>

                                             AP HENDERSON GROUP
                                     (FORMERLY MAGNOLIA VENTURES, INC.)
                                         CONSOLIDATED BALANCE SHEETS
                                 AS OF DECEMBER 31, 2002 AND MARCH 31, 2003
<CAPTION>

                                                              DECEMBER 31,      MARCH 31,       MARCH 31,
                                                                  2002            2003            2003
                                                                RMB'000          RMB'000         US$'000
                                                             ---------------  --------------  --------------
                                                                                (UNAUDITED)    (UNAUDITED)
<S>                                                          <C>              <C>             <C>
ASSETS
Current assets
   Cash and cash equivalents                                        121,236         313,073          37,544
   Accounts receivable, net                                           6,215           7,169             860
   Due from related parties                                          30,822          31,047           3,723
   Inventories                                                      119,595         171,443          20,560
   Prepaid expenses and other current assets                         53,396         148,385          17,794
                                                             ---------------  --------------  --------------
     Total current assets                                           331,264         671,117          80,481

Property, plant and equipment, net                                  171,837         187,811          22,522
Intangible and other assets, net                                      4,513           3,916             470
Deferred tax assets                                                   2,968           2,968             356
                                                             ---------------  --------------  --------------

     Total assets                                                   510,582         865,812         103,829
                                                             ===============  ==============  ==============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
   Accounts payable and accrued liabilities                          74,096         192,966          23,141
   Short-term debts                                                  88,500         336,389          40,340
   Due to related parties                                            41,071          40,980           4,914
   Income taxes payable                                               9,450           1,809             217
   Other taxes payable                                               12,476          12,476           1,496
                                                             ---------------  --------------  --------------
     Total current liabilities                                      225,593         584,620          70,108
                                                             ---------------  --------------  --------------

Long-term liabilities
   Due to related parties                                            23,118          21,531           2,582
   Long-term debts                                                  145,350         145,350          17,431
                                                             ---------------  --------------  --------------

     Total liabilities                                              394,061         751,501          90,121

Shareholders' equity
   Preferred share - RMB 0.08 (US$ 0.01) par value, 25,000,000
     shares authorized, no shares issued and outstanding                  -               -               -
   Common share - RMB 0.008 (US$ 0.001) par value, 200,000,000
     shares authorized, 39,375,000 and 45,000,002 shares issued
      and outstanding at December 31, 2002 and March 31, 2002,
      respectively                                                      326             360              43
   Additional paid-in capital                                        48,384          48,384           5,802
   Retained earnings                                                 63,904          64,434           7,727
   Statutory common funds                                             3,907           1,133             136
                                                             ---------------  --------------  --------------
     Total shareholders' equity                                     116,521         114,311          13,708
                                                             ---------------  --------------  --------------

     Total liabilities and shareholders' equity                     510,582         865,812         103,829
                                                             ===============  ==============  ==============


                              See accompanying notes to consolidated financial statements

                                                          -3-

</TABLE>

<PAGE>
<TABLE>
                                                   AP HENDERSON GROUP
                                           (FORMERLY MAGNOLIA VENTURES, INC.)
                                           CONSOLIDATED STATEMENTS OF INCOME
                                   FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2003
                                                      (UNAUDITED)
<CAPTION>

                                                                       2002              2003               2003
                                                                      RMB'000           RMB'000            US$'000
                                                                  ----------------  ----------------   ----------------
<S>                                                               <C>               <C>                <C>
REVENUES
    Sales and other operating revenues                                    115,026           268,884             32,245

OPERATING EXPENSES
    Purchases, services and other                                          99,082           240,650             28,859
    Selling, general and administrative expenses                            5,394             8,426              1,010
    Taxes other than income taxes                                           9,848            12,607              1,512
                                                                  ----------------  ----------------   ----------------
      Total operating expenses                                            114,324           261,683             31,381
                                                                  ----------------  ----------------   ----------------

        Income from operations                                                702             7,201                864

OTHER INCOME (EXPENSE)
    Other income (expense), net                                                75            (5,104)              (613)
                                                                  ----------------  ----------------   ----------------
      Total other income (expense)                                             75            (5,104)              (613)
                                                                  ----------------  ----------------   ----------------
        Income before income taxes and minority interests                     777             2,097                251
    Income taxes                                                              376             1,018                122
                                                                  ----------------  ----------------   ----------------
        Income before minority interests                                      401             1,079                129
    Income (loss) applicable to minority interests                              -                 -                  -
                                                                  ----------------  ----------------   ----------------

        Net income                                                            401             1,079                129
                                                                  ================  ================   ================

Earnings per share data:
    Basic & fully diluted earnings per share                                 0.01              0.02               0.00
                                                                  ================  ================   ================
    Weighted average common shares outstanding                         39,375,000        44,062,500         44,062,500
                                                                  ================  ================   ================

                              See accompanying notes to consolidated financial statements

                                                          -4-

</TABLE>

<PAGE>
<TABLE>

                                                   AP HENDERSON GROUP
                                           (FORMERLY MAGNOLIA VENTURES, INC.)
                                         CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2003
                                                      (UNAUDITED)

<CAPTION>

                                                                 2002             2003            2003
                                                                RMB'000         RMB'000          US$'000
                                                             --------------  ---------------  --------------
<S>                                                          <C>             <C>              <C>
CASH FLOW FROM OPERATING ACTIVITIES
   Net income                                                          401            1,079             129
   Adjustments to reconcile net income to net
     cash provided by operating activities:
       Depreciation and amortization                                 3,118            3,804             456
   Net changes in operating assets and liabilities                 (38,292)         (48,387)         (5,802)
                                                             --------------  ---------------  --------------
       Net cash provided by operating activities                   (34,773)         (43,504)         (5,217)
                                                             --------------  ---------------  --------------

CASH FLOW FROM INVESTING ACTIVITIES
   Purchases of property, plant and equipment                      (30,861)         (12,558)         (1,506)
                                                             --------------  ---------------  --------------
       Net cash used in investing activities                       (30,861)         (12,558)         (1,506)
                                                             --------------  ---------------  --------------

CASH FLOW FROM FINANCING ACTIVITIES
   Proceeds from short and long-term debt                           32,582          563,247          67,545
   Payments on short and long-term debt                             (5,673)        (315,348)        (37,817)
                                                             --------------  ---------------  --------------
       Net cash provided by financing activities                    26,909          247,899          29,728
                                                             --------------  ---------------  --------------

Net change in cash and cash equivalents                            (38,725)         191,837          23,005
Beginning cash and cash equivalents                                 79,512          121,236          14,539
                                                             --------------  ---------------  --------------

Ending cash and cash equivalents                                    40,787          313,073          37,544
                                                             ==============  ===============  ==============



                              See accompanying notes to consolidated financial statements

                                                          -5-
</TABLE>
<PAGE>

                               AP HENDERSON GROUP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 MARCH 31, 2003

                                   (UNAUDITED)

NOTE A -- ORGANIZATION

AP Henderson Group, formerly Magnolia Ventures, Inc. (the "Company"), was
incorporated on June 13, 1994 in the State of Nevada. On January 15, 2003, the
Company consummated an agreement to acquire all of the outstanding capital stock
of AP Henderson Ventures, a Nevada Corporation ("AP Ventures"), in exchange for
5,625,000 shares of the Company's common stock ("AP Ventures Transaction").
Prior to the AP Ventures Transaction, the Company was a non-operating public
company with no operations or assets and 39,375,000 common shares issued and
outstanding; and AP Ventures was a privately held company in the business of
owning and operating a petrochemical refinery and agricultural chemical
manufacturing company in the People's Republic of China ("PRC"). The AP Ventures
Transaction is considered to be a capital transaction in substance, rather than
a business combination. Inasmuch, the AP Ventures Transaction is equivalent to
the issuance of shares by a private company (AP Ventures) for the net
non-monetary assets of a non-operational public company (the Company),
accompanied by a recapitalization. The accounting for the AP Ventures
Transaction is identical to that resulting from a reverse acquisition, except
goodwill or other intangible assets are not recorded. Accordingly, these
financial statements are the historical financial statements of AP Ventures.
Subsequent to the AP Ventures Transaction, the Company changed its name to AP
Henderson Group.

AP Ventures conducts its operations through its subsidiary Jingbo Chemical (Bo
Xing) Company Limited ("Jingbo"), a foreign direct-owned company in the People's
Republic of China ("PRC"). Jingbo has two divisions: a petrochemical division
engaged in the manufacturing and distribution of petrochemical products in the
PRC; and an agrochemical division engaged in the manufacturing and distribution
of agricultural insecticide and chemicals.

On February 11, 2003, the Company effectuated a 1.875 for 1 forward stock-split.
Accordingly, the consolidated financial statements have been retroactively
adjusted to reflect the forward stock-split from the date of the Company's
inception.

The consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States.

The consolidated financial statements are expressed in Renminbi ("RMB"), the
national currency of the PRC. Solely for the convenience of the reader, the
March 31, 2003 consolidated financial statements have been converted into United
States dollars at the noon buying rate in New York City on March 31, 2003 for
cable transfers in RMB as certified for customs purposes by the Federal Reserve
Bank of New York of US$1.00 = RMB 8.3388. No representation is made that the RMB
amounts could have been, or could be, converted into United States dollars at
that rate or at any other certain rate on March 31, 2003, or at any other date
and accordingly no currency conversion gain or loss are reflected as a result of
this translation.

The consolidated financial statements have been prepared in accordance with
Securities and Exchange Commission requirements for interim financial
statements. Therefore, they do not include all of the information and footnotes
required by accounting principles generally accepted in the United States for
complete financial statements. The financial statements should be read in
conjunction with the financial statements and notes thereto contained in the
Company's annual report on Form 10-K/A for the year ended December 31, 2002.

The results of operations for the interim periods shown in this report are not
necessarily indicative of results to be expected for the full year. In the
opinion of management, the information contained herein reflects all adjustments
necessary to make the results of operations for the interim periods a fair
statement of such operation. All such adjustments are of a normal recurring
nature.


                                      -6-
<PAGE>
                               AP HENDERSON GROUP

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 MARCH 31, 2003

                                   (UNAUDITED)


NOTE B -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. MANAGEMENT ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

2. INVENTORIES

Inventories are stated at the lower of cost or market value. The method of
determining cost is used consistently from year to year at each entity level and
varies among first-in-first-out and weighted average cost.

NOTE C -- INVENTORIES

As of March 31, 2003, inventories consisted of the following:

                                                                RMB'000

         Raw materials                                           84,584
         Work-in-progress                                        23,016
         Finished goods                                          63,843
                                                           ---------------
                                                                171,443
                                                           ===============

NOTE D - SHORT-TERM DEBTS

During the first quarter of fiscal year 2003, the Company increased its
short-term debts as result of new loans obtained from various financial
institutions in the PRC. As of March 31, 2003, short-term debts are comprised of
the following:
                                                                RMB'000

Bank loans                                                      310,889
Other borrowings from unrelated parties                          25,500
                                                             -----------

                                                                336,389
                                                             ===========

As of March 31, 2003, bank loans totaling RMB 310,889,000 were unsecured. Bank
loan of RMB 252,889,000 was unsecured and bears interest rate ranging from 3.24%
to 5.31% per annum for the three months ended March 31, 2003. All bank loans
mature within one year.

Other borrowings from unrelated parties are unsecured and bear interest at bank
rate in the PRC ranging from 5.24% to 5.85% per annum for the three months ended
March 31, 2003.


                                      -7-


<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         UNLESS OTHERWISE INDICATED, ALL REFERENCES TO OUR COMPANY INCLUDE OUR
WHOLLY-OWNED SUBSIDIARIES, AP HENDERSON VENTURES, A NEVADA CORPORATION, AND
JINGBO CHEMICAL (BO XING) CO., LTD., A CHINESE FOREIGN DIRECT INVESTMENT
ENTERPRISE.

         ALL OF OUR SALES AND EXPENSES ARE DENOMINATED IN RENMINBI ("RMB"), THE
NATIONAL CURRENCY OF THE PEOPLE'S REPUBLIC OF CHINA. SOLELY FOR THE CONVENIENCE
OF THE READER, THE FINANCIAL INFORMATION AS OF DECEMBER 31, 2002 AND MARCH 31,
2003 HAVE BEEN CONVERTED INTO UNITED STATES DOLLARS AT THE NOON BUYING RATE IN
NEW YORK CITY ON SUCH DATES AS CERTIFIED FOR CUSTOMS PURPOSES BY THE FEDERAL
RESERVE BANK OF NEW YORK OF (US$1.00 = RMB 8.2773 AS OF DECEMBER 31, 2002 AND =
RMB 8.3388 AS OF MARCH 31, 2003). NO REPRESENTATION IS MADE THAT THE RMB AMOUNTS
COULD HAVE BEEN, OR COULD BE, CONVERTED INTO UNITED STATES DOLLARS AT THAT RATE
OR AT ANY OTHER CERTAIN RATE AS OF THE RESPECTIVE DATES OR AT ANY OTHER DATE.

         ALL SHARE INFORMATION IN THIS REPORT HAS BEEN ADJUSTED TO GIVE EFFECT
TO A 1.875 FOR ONE SPLIT OF OUR COMMON STOCK EFFECTIVE AS OF FEBRUARY 11, 2003.

         THE STATEMENTS CONTAINED IN THIS REPORT THAT ARE NOT HISTORICAL ARE
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND SECTION 21E OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"), INCLUDING
STATEMENTS, WITHOUT LIMITATION, REGARDING OUR EXPECTATIONS, BELIEFS, INTENTIONS
OR STRATEGIES REGARDING THE FUTURE. WE INTEND THAT SUCH FORWARD-LOOKING
STATEMENTS BE SUBJECT TO THE SAFE-HARBOR PROVIDED BY THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. SUCH FORWARD-LOOKING STATEMENTS RELATE TO, AMONG
OTHER THINGS: (1) EXPECTED REVENUE AND EARNINGS GROWTH; (2) ESTIMATES REGARDING
THE SIZE OF TARGET MARKETS; AND (3) REGULATION OF OUR INDUSTRIES AND MARKETS BY
THE CHINESE GOVERNMENT. THESE STATEMENTS ARE QUALIFIED BY IMPORTANT FACTORS THAT
COULD CAUSE OUR ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE REFLECTED BY THE
FORWARD-LOOKING STATEMENTS. SUCH FACTORS INCLUDE BUT ARE NOT LIMITED TO: (1) OUR
ABILITY TO PURCHASE CRUDE OIL FROM LOCAL SUPPLIERS IN SUFFICIENT QUANTITIES, (2)
OUR ABILITY TO OBTAIN GOVERNMENT APPROVAL TO IMPORT CRUDE OIL AS WE DESIRE, (3)
DISRUPTION OF OUR MARKETS AND INDUSTRIES BY CHINA'S ENTRY INTO THE WORD TRADE
ORGANIZATION AND (4) THOSE OTHER FACTORS DISCUSSED ELSEWHERE IN THIS REPORT.

BACKGROUND

         AP Henderson Group, via our wholly-owned subsidiary, Jingbo Chemical
(Bo Xing) Company Ltd., is engaged in the business of owning and operating a
petrochemical refinery and agrochemical manufacturing company in the People's
Republic of China ("PRC"). We are one of the largest independent petroleum
refiners and suppliers of transportation fuels, fuel oil, liquefied petroleum
gas (LPG), oxidized asphalt and other petrochemical products in the Shandong
province of the PRC. Our agrochemical division is a major manufacturer and
supplier of insecticide, fungicide, herbicide and other agrochemical products in
the eastern and northeastern parts of China.

         We own and operate a combined petrochemical and agrochemical refinery.
Our refinery is located in Chen Hu Town, Bo Xing County, Shandong Province,
256505, People's Republic of China and occupies a total area of 335,000 square
meters. The facility has a combined crude oil primary distillation throughput
capacity of approximately 1,300,000 tons per year. Our refinery has a complex
configuration that enables us to process lower cost sour and heavy sour crude
oil, thus providing us with a cost advantage. We are an independent
petrochemical refinery operator, which means that we do not produce crude oil
nor do we conduct the retail sale or marketing of our refined products. We sell
our refined petrochemical products on a wholesale basis primarily in the
Shandong and neighboring provinces. We also manufacture and sell seven lines of
agrochemical products. Our agrochemical products are sold in 18 provinces of the
People's Republic of China, Asian Pacific regions and Africa.

REORGANIZATION

         We were organized as a Nevada corporation on June 13, 1994 under the
name Magnolia Ventures, Inc. for the purpose of listing our securities on an
electronic stock exchange and then acquiring an interest in a suitable operating
business. We conducted no operations from the date of our organization until
January 2003, other than the pursuit and analysis of suitable business
acquisitions.

                                      -8-
<PAGE>

         On January 15, 2003, we were the subject of a reverse acquisition by AP
Henderson Ventures, a Nevada corporation ("AP Ventures"), pursuant to which we
acquired all of the outstanding capital shares of AP Ventures in exchange for a
controlling interest in our common shares. Following the close of the
transaction, we changed our corporate name from Magnolia Ventures, Inc. to AP
Henderson Group.

         AP Ventures was organized on December 31, 2002 for the purpose of
acquiring all of the capital shares of Jingbo Chemical (Bo Xing) Co., Ltd.
("Jingbo"), a Chinese foreign direct investment enterprise. On December 31,
2002, AP Ventures acquired all of the capital shares of Jingbo. Jingbo was
formed in 2002 for the purpose of acquiring certain operating assets and
liabilities of Shandong Jingbo Petrochemical Company Limited, Shandong Jingbo
Agrochemical Company Limited and Shandong Boxing Lu Nong Chemical Company
Limited, which together had been engaged in the business of owning and operating
a petrochemical refinery and agrochemical manufacturing company in the PRC.
Jingbo acquired the operating assets and liabilities of Shandong Jingbo
Petrochemical Company Limited, Shandong Jingbo Agrochemical Company Limited and
Shandong Boxing Lu Nong Chemical Company Limited on December 31, 2002,
immediately prior to AP Ventures' acquisition of the capital shares of Jingbo.

         From the dates of their inception to January 15, 2003, neither Jingbo
nor AP Ventures conducted any operations or engaged in any capital transactions
apart from Jingbo's acquisition of the assets and liabilities of Shandong Jingbo
Petrochemical Company Limited, Shandong Jingbo Agrochemical Company Limited and
Shandong Boxing Lu Nong Chemical Company Limited, and AP Ventures' subsequent
acquisition of the capital shares of Jingbo. Our acquisition of AP Ventures is
considered to be a capital transaction in substance, rather than a business
combination, inasmuch as the transaction is equivalent to the issuance of shares
by a private company (AP Ventures) for the net non-monetary assets of a
non-operational public company, accompanied by a recapitalization. The
accounting for our acquisition of AP Ventures is identical to that resulting
from a reverse acquisition, except goodwill and other intangible assets are not
recorded. Accordingly, our financial statements are the historical financial
statements of AP Ventures.

RESULTS OF CONSOLIDATED OPERATIONS

         FOR THE THREE MONTHS ENDED MARCH 31, 2003 COMPARED TO THE THREE MONTHS
         ENDED MARCH 31, 2002

         REVENUES. Revenues for the three months ended March 31, 2003 increased
by RMB154 million (US$18.5 million) or 134% compared to the same period in 2002.
The increase was due primarily to an expansion of our petrochemical refinery
facility in Shandong Province, PRC. In 2002, we increased our petrochemical
refinery operations from a distillation throughout capacity of 300,000 tons
annually to a capacity of 1,300,000 tons annually. Revenues from the sale of
petrochemical products for the three months ended March 31, 2003 increased by
RMB150 million (US$17.9 million) or 130% compared to the same period in 2002.
Revenues from the sale of agrochemical products for the three months ended March
31, 2003 increased by RMB3.5 million (US$423 thousand) or 372% compared to the
same period in 2002.

         PURCHASES, SERVICES AND OTHER. Purchases, services and others represent
our cost of goods in the refinery of our petrochemical products and manufacture
of our agrochemical products. Expenses for purchases, services and others for
the three months ended March 31, 2003 increased by RMB142 million (US$16.98
million) or 142.9% compared to the same period in 2002. The increase was due to
the overall increase in revenue.

         GROSS PROFIT. Gross profit increased by RMB12.3 million (US$1.47
million) due to the increase in overall sales. However, gross profit as a
percentage of revenue declined from 13.86% in the first quarter of 2002 to 10.5%
during the first quarter of 2003.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the three months ended March 31, 2003 increased by
RMB3 million (US$364 thousand) or 56% compared to the same period in 2002.
However, selling, general and administrative expenses as a percentage of revenue
declined from 4.7% in the first quarter of 2002 to 3.1% during the first quarter
of 2003 as a result of a cost cutting program instituted in the latter part of
2002.

                                      -9-
<PAGE>

         TAXES OTHER THAN INCOME TAXES. Taxes other than income taxes represent
a value added tax charged by the PRC on the sale of our petrochemical and
agrochemical products. The percentage amount of the tax varies by product. Taxes
other than income taxes for the three months ended March 31, 2003 increased by
RMB2.7 million (US$331 thousand) or 28% compared to the same period in 2002.
However, taxes other than income taxes expressed as a percentage of revenue
declined from 8.6% in the first quarter of 2002 to 4.7% during the first quarter
of 2003 as a result of our production and sale of products with lower tax rates.

         INCOME FROM OPERATIONS. Income from operations for the three months
ended March 31, 2003 increased by RMB6.5 million (US$779 thousand) or 926%
compared to the same period in 2002. Income from operations expressed as a
percentage of revenue increased from 0.61% in the first quarter of 2002 to 2.7%
during the first quarter of 2003 as a result of our reduction of selling,
general and administrative expenses and sale of products with lower value added
tax rates.

         OTHER INCOME (EXPENSES). Other income (expenses) for the three months
ended March 31, 2003 increased by RMB5.2 million (US$621 thousand) compared to
the same period in 2002. This increase primarily relates to interest expense
approximating RMB4.5 million related to short-term and long-term debts, which
increased significantly compared to the previous year period as a result of
increased capital expenditures and operational expansion.

         NET INCOME. Net income for the three months ended March 31, 2003
increased by RMB678 thousand (US$81 thousand) or 169% compared to the same
period in 2002. Net income expressed as a percentage of revenue was
substantially the same in the first quarter of 2002 (0.35%) compared to the
first quarter of 2003 (0.4%).

LIQUIDITY AND CAPITAL RESOURCES

         Liquidity is a measure of an entity's ability to meet potential cash
requirements, including planned capital expenditures. We have historically met
our capital requirements through cash flows from operations and debt financing
with local financial institutions.

         Cash flows used by operating activities were RMB43.5 million (US$5.2
million) for the three months ended March 31, 2003, compared to RMB34.8 (US$4.2
million) used by operating activities for the same period in 2002.

         Cash flows used in investing activities were RMB12.5 million (US$1.5
million) for the three months ended March 31, 2003, compared to RMB30.9 million
(US$3.7 million) used in investing activities for the same period in 2002.

         Cash flows provided by financing activities were RMB248 million
(US$29.7 million) for the three months ended March 31, 2003, compared to RMB26.9
million (US$3.2 million) provided by financing activities for the same period in
2002.

         As of March 31, 2003, we had working capital of RMB86 million (US$10.4
million). We believe that existing cash balances, cash generated by operating
activities, and funds available under our credit facility will be sufficient to
finance our operating activities for at least the next 12 months. To the extent
that the funds generated from these sources are insufficient to finance our
operating activities, we would need to raise additional funds through public or
private financing. We cannot assure you that additional financing will be
available on terms favorable to us, or at all.

CRITICAL ACCOUNTING POLICIES

         REVENUES. Sales are recognized when the revenue is realized or
realizable, and has been earned. In general, revenue is recognized when risk and
title to the product transfers to the customer, which usually occurs at the time
shipment is made or as services are rendered.

                                      -10-
<PAGE>

         EXPENSES. Expenses are recognized during the period in which they are
incurred.

         INVENTORY. Inventory is stated at the lower of cost or market value.
The method of determining cost is used consistently from year to year at each
entity level and varies among first-in-first-out and weighted average cost.

FACTORS AFFECTING OPERATING RESULTS

         Our results of operations and the period-to-period comparability of our
financial results are affected by a number of external factors, including
changes in the prices of crude oil, refined products, and chemical products and
fluctuations in exchange rates and interest rates.

         INDUSTRIAL RISK. Like other crude oil refinery companies in the PRC,
our business activities are subject to regulation and control of the PRC
government in many aspects such as the grant of production licenses, special
taxes relating to our industry and environmental and safety standards, all of
which may affect our business operations. We receive an allocation of crude oil
from state controlled oil producers in the PRC, The China National Petroleum
Corporation and The China Petroleum and Chemical Corporation, who together are
the dominant producers and refiners of crude oil in the PRC. The import and
export of crude oil and refined products is subject to quota and licensing
control by the government of the PRC. At the present time, we are not able to
import crude oil from sources outside of the PRC. We have applied to the
Ministry of Foreign Trade and Economic Cooperation for a license to import up to
1 million tons of crude oil per year. If we obtain the license, of which there
is no assurance, we expect it will be for an initial term of 12 months and
subject to annual renewal. For the foregoing reasons, we may be subject to
substantial restrictions when implementing our business strategy, developing and
expanding our business or attempting to maximize our profitability. Any future
change in the PRC government's policies on the crude oil and natural gas
industry may also affect our business operations.

         CRUDE OIL PRICES. Our results of operations are substantially
influenced by crude oil prices. Since 2001, the PRC government has published
benchmark prices for crude oil in China, which are adjusted on a monthly basis
to equal Singapore market FOB prices for similar grades of crude oil,
supplemented by an amount equal to the customs duty payable on the import of
crude oil. Our suppliers have set our crude oil median prices monthly based on
the Singapore market FOB prices for crude oil. Our actual realized crude oil
prices include a premium on, or discount from, the median prices which primarily
reflects transportation costs, differences in oil quality and market supply and
demand conditions.

         REFINED PRODUCT PRICES. The State Development Planning Commission sets
wholesale and retail prices for our major refined products (gasoline, diesel,
LPG, fuel oil and kerosene). Since June 2000, the State Development Planning
Commission has adjusted such retail median prices on a monthly basis to reflect
the FOB Singapore, Rotterdam and New York trading prices for gasoline and diesel
in the previous month, supplemented by transportation costs and taxes. We set
our retail prices within an 8% floating range of the published median gasoline
and diesel guidance prices. We determine the prices of other refined products
with reference to the published median guidance prices of gasoline and diesel.

         SARS. In March 2003, several countries, including China, experienced an
outbreak of a new and highly contagious form of atypical pneumonia now known as
"severe acute respiratory syndrome" or "SARS." The severity of the outbreak in
certain municipalities, such as Beijing, and provinces, such as Guangdong
Province, has affected general commercial activity. While the long-term impact
of the SARS outbreak is unclear at this time, the prolonged existence of SARS
could have a negative impact on the PRC economy and, in turn, have a material
adverse effect on our results of operations

         CHINA ECONOMY AND POLITICAL SITUATION. The PRC government recently
underwent substantial reforms after the National People's Congress meeting in
March 2003. The PRC government has reiterated its policy of furthering reforms
in the socialist market economy. No assurance can be given that these changes
will not have an adverse effect on business conditions in China generally or on
our business in particular.

                                      -11-
<PAGE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         Market risk is the risk of loss to future earnings, to fair values or
to future cash flows that may result from changes in the price of a financial
instrument. The value of a financial instrument may change as a result of
changes in interest rates, exchange rates, commodity prices, equity prices and
other market changes. Market risk is attributed to all market sensitive
financial instruments, including long-term debt.

         We do not utilize derivative financial instruments or investments in
available-for-sale securities. All cash is held in both interest and
non-interest bearing account. However, we do not believe that our cash account
would have significant impact as a result of changes in interest rate since we
do not rely on earnings from our cash accounts for cash flow. Accordingly, our
exposure to market risk is through our bank debt which bears interest at
variable rates. As of March 31, 2003, our bank debt consisted of RMB 424 million
(US$50.8 million) of indebtedness bearing interest at the prime rate announced
by the Central Bank of China from time to time. An increase in lending rates of
1% would cause our interest expense to increase by US$51 thousand.

ITEM 4.  CONTROLS AND PROCEDURES.

         During the 90-day period prior to the filing date of this report,
management, including our Chief Executive Officer and Chief Financial Officer,
evaluated the effectiveness of the design and operation of our disclosure
controls and procedures. Based upon, and as of the date of that evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that the
disclosure controls and procedures were effective, in all material respects, to
ensure that information required to be disclosed in the reports we file and
submit under the Exchange Act are recorded, processed, summarized and reported
as and when required.

         There have been no significant changes in our internal controls or in
other factors which could significantly affect internal controls subsequent to
the date our management carried out their evaluation. There were no significant
deficiencies or material weaknesses identified in the evaluation and therefore,
no corrective actions were taken.


                                      -12-
<PAGE>

                                     PART II

                                OTHER INFORMATION

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         In January 2003, we issued 5,625,000 shares (post-split) of our common
stock to Richard Henry in exchange for his transfer to us of all of the issued
and outstanding capital shares of AP Ventures. The issuance was conducted
pursuant to Section 4(2) of the Securities Act. There were no underwriters
involved in the transaction.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         On February 8, 2003, a special meeting of our stockholders was held for
purposes of seeking stockholder approval of (i) an amendment to our articles of
incorporation for purposes of (a) increasing our authorized common stock to 200
million shares and preferred stock to 50 million shares, (b) effecting a 1.875
for one split of our outstanding common shares, and (c) changing our corporate
name to "AP Henderson Group"; and (ii) an amendment to our bylaws to allow our
board of directors to change the number of authorized directors. Out of a total
of 45,000,002 shares (post-split) of common stock issued, outstanding and
entitled to vote at the meeting, approximately 42,499,965 common shares
(post-split) were present at the meeting in person or by proxy. All of the
matters put before the stockholders were approved with 42,499,965 (post-split)
common shares voting in favor of all matters, with no votes against and no
abstentions.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a) Exhibits

    Item No.                  Description                  Method of Filing
-----------------    ------------------------------      -------------------

99.1                 Section 906 Certification           Filed herewith


(b) Reports on Form 8-K

         On January 30, 2003, we filed a current report on Form 8-K to report
(i) the changes in control described elsewhere in this quarterly report and (ii)
the proposed change in corporate name and forward spilt of our common shares as
described in Item 4 above.

         On March 31, 2003, we filed an amendment to our current report on Form
8-K dated January 30, 2003 to report certain historical and pro forma financial
statements relating to our acquisition of AP Ventures.

                                      -13-
<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                      AP HENDERSON GROUP
                                      (Registrant)


Dated:  May 20, 2003                  By:   /s/ Richard Henry
                                         ---------------------------------------
                                            Richard Henry,
                                            President, Chief Executive Officer
                                              and Chief Financial Officer



                                      -14-
<PAGE>

                                 CERTIFICATIONS

I, Richard Henry, certify that:

1. I have reviewed this quarterly report on Form 10-Q of AP Henderson Group
("registrant"):

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the periods covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

         a) designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

         b) evaluated the effectiveness of the registrant's disclosure controls
         and procedures as of a date within 90 days prior to the filing date of
         this quarterly report (the "Evaluation Date"); and

         c) presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

         a) all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

         b) any fraud, whether or not material, that involves management or
         other employees who have a significant role in the registrant's
         internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: May 20, 2003

     /s/ Richard Henry
--------------------------
Richard Henry,
Chief Financial Officer

                                      -15-
<PAGE>

                                 CERTIFICATIONS

I, Richard Henry, certify that:

1. I have reviewed this quarterly report on Form 10-Q of AP Henderson Group
("registrant"):

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

         a) designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

         b) evaluated the effectiveness of the registrant's disclosure controls
         and procedures as of a date within 90 days prior to the filing date of
         this quarterly report (the "Evaluation Date"); and

         c) presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

         a) all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

         b) any fraud, whether or not material, that involves management or
         other employees who have a significant role in the registrant's
         internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: May 20, 2003

     /s/ Richard Henry
----------------------------
Richard Henry
Chief Executive Officer

                                      -16-