3SBio Inc. — Interim / Quarterly Report 2002

Sep 24, 2002

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HONGKONG CHINESE LIMITED 香港華人有限公司 [*]

(Incorporated in Bermuda with limited liability)

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30TH JUNE, 2002

INTERIM RESULTS

The Directors of Hongkong Chinese Limited (the “Company”) announce that the unaudited consolidated interim results of the Company and its subsidiaries (together, the “Group”) for the six months ended 30th June, 2002 together with the comparative figures for the corresponding period in 2001 are as follows:

Note Turnover 4 Cost of sales Gross profit Other revenue Administrative expenses Other operating expenses Provisions for bad and doubtful debts relating to banking operations Loss on disposal of subsidiaries 5 Profit/(Loss) from operating activities 6 Finance costs Share of results of associates Profit/(Loss) before tax Tax 7 Profit/(Loss) before minority interests Minority interests Net profit/(loss) from ordinary activities attributable to shareholders Earnings/(Loss) per share 8 Basic Diluted

Six months ended 30th June, 2002 2001 HK$’000 HK$’000 (Restated) 148,576 452,538 (63,463) (38,698) 85,113 413,840 — 860 (48,145) (168,570) (32,096) (45,903) (4,025) (60,836) (10,545) — (9,698) 139,391 (2,173) (10,008) 283 317 (11,588) 129,700 (208) (6,262) (11,796) 123,438 86 (258) (11,710) 123,180 HK cents HK cents (0.87) 9.11 N/A 9.11

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HONGKONG CHINESE – ANNOUNCEMENT 23RD SEPTEMBER, 2002

Note:

1. Basis of Preparation

Following the disposal of The Hongkong Chinese Bank, Limited and its subsidiaries, the Group no longer follows the disclosure requirements as set out in the Supervisory Policy Manual “Financial Disclosure by Locally Incorporated Authorized Institutions” issued by the Hong Kong Monetary Authority. The disposal was completed on 17th January, 2002.

Accordingly, interest income was not separately shown on the face of the profit and loss account. Turnover of the Group is newly defined as set out in Note 4 to the interim results.

This change resulted in the restatement of the Group’s profit and loss account to conform with the current period’s presentation.

2. Principal Accounting Policies

The interim results are unaudited. Apart from the changes in presentation as stated in Note 1 to the interim results, the accounting policies and disclosure practices adopted in the preparation of the interim results are consistent with those adopted in the Group’s audited financial statements for the year ended 31st December, 2001 except that the Group has changed certain of its accounting policies and disclosure practices as a result of the adoption of the following Statements of Standard Accounting Practice (“SSAPs”) issued by the Hong Kong Society of Accountants which are effective for accounting periods commencing on or after 1st January, 2002:

SSAP 1 (revised): Presentation of financial statements SSAP 11 (revised): Foreign currency translation SSAP 15 (revised): Cash flow statements SSAP 25 (revised): Interim financial reporting SSAP 33: Discontinuing operations SSAP 34: Employee benefits

The adoption of these new or revised SSAPs did not have significant impact on the interim results.

3. Segment Information

Segment information is presented by way of business segment as the primary reporting format. No analysis of geographical segment which is regarded as the secondary segment is presented as the Group’s revenue and results are based in Hong Kong.

A description of the business segments is as follows:

• (a) treasury investment segment includes investment in cash and bond markets;

• (b) securities investment segment includes dealings in securities and disposals of investments;

• (c) money lending segment includes the provision of finance;

• (d) corporate finance and securities broking segment provides securities and futures brokerage, investment banking, underwriting and other related advisory services;

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HONGKONG CHINESE – ANNOUNCEMENT 23RD SEPTEMBER, 2002

• (e) banking businesses segment engages in the provisions of commercial and retail banking;

• (f) insurance business segment includes the underwriting of general insurance business and the provision of general insurance agency services; and

• (g) other segment includes fund management and letting of properties.

An analysis of the Group’s segment revenue and segment results by business segment is set out below:

Treasury Securities investment investment HK$’000 HK$’000 Revenue External 25,507 35,246 Inter-segment 712 — Total 26,219 35,246 Segment results 26,031 (354) Unallocated corporate expenses Share of results of associates — — Loss before tax Tax Loss before minority interests Minority interests Net loss from ordinary activities attributable to shareholders	Six months ended 30th June, 2002 Corporate finance and Money securities Banking Insurance lending broking businesses business HK$’000 HK$’000 HK$’000 HK$’000 6,890 29,748 24,339 24,327 41 — 276 — 6,931 29,748 24,615 24,327 1,143 (5,719) (1,472) (260) — — — 283	Inter- segment Other elimination Consolidated HK$’000 HK$’000 HK$’000 2,519 — 148,576 — (1,029) — 2,519 (1,029) 148,576 (15,220) — 4,149 (16,020) — — 283 (11,588) (208) (11,796) 86 (11,710)

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HONGKONG CHINESE – ANNOUNCEMENT 23RD SEPTEMBER, 2002

Treasury Securities investment investment HK$’000 HK$’000 Revenue External 9,008 3,418 Inter-segment 15,757 — Total 24,765 3,418 Segment results 13,001 1,324 Unallocated corporate expenses Share of results of associates — — Profit before tax Tax Profit before minority interests Minority interests Net profit from ordinary activities attributable to shareholders	Six months ended 30th June, 2001 Corporate finance and Money securities Banking Insurance lending broking businesses business HK$’000 HK$’000 HK$’000 HK$’000 124,766 37,680 246,053 24,824 1,402 — 15,667 — 126,168 37,680 261,720 24,824 40,166 3,834 80,252 527 — — — 317	Inter- segment Other elimination Consolidated HK$’000 HK$’000 HK$’000 7,649 — 453,398 — (32,826) — 7,649 (32,826) 453,398 (2,006) — 137,098 (7,715) — — 317 129,700 (6,262) 123,438 (258) 123,180

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HONGKONG CHINESE – ANNOUNCEMENT 23RD SEPTEMBER, 2002

4. Turnover

Turnover represents the aggregate of gross income on treasury investment which includes interest income on bank deposits and held-to-maturity securities, gross proceeds from sales of investments, gross income from underwriting and securities broking, interest income from money lending business, gross income from fund management, gross premiums from insurance business, dividend income and net interest income, commissions, dealing income and other revenues from banking subsidiaries.

An analysis of the turnover of the Group by principal activity is as follows:

Treasury investment Securities investment Interest and other income from money lending business Corporate finance and securities broking Banking businesses Insurance business Other	Six months ended 30th June, 2002 2001 HK$’000 HK$’000 25,507 9,008 35,246 3,418 6,890 124,766 29,748 37,680 24,339 245,193 24,327 24,824 2,519 7,649 148,576 452,538	Six months ended 30th June, 2002 2001 HK$’000 HK$’000 25,507 9,008 35,246 3,418 6,890 124,766 29,748 37,680 24,339 245,193 24,327 24,824 2,519 7,649 148,576 452,538
		452,538

Turnover attributable to banking businesses represents turnover generated from Finibanco (Macau), S.A.R.L., a licensed credit institution under the Financial System Act of the Macao Special Administrative Region of the People’s Republic of China, since its acquisition by the Group in May 2002 and that generated from The Hongkong Chinese Bank, Limited up to its disposal by the Group in January 2002. Turnover attributable to banking businesses is analysed as follows:

Interest income Interest expenses Commission income Commission expenses Net dealing income and other revenues	Six months ended 30th June, 2002 2001 HK$’000 HK$’000 34,693 629,765 (13,813) (437,457) 2,188 24,028 (274) (3,149) 1,545 32,006 24,339 245,193	Six months ended 30th June, 2002 2001 HK$’000 HK$’000 34,693 629,765 (13,813) (437,457) 2,188 24,028 (274) (3,149) 1,545 32,006 24,339 245,193
		245,193

5. Loss on Disposal of Subsidiaries

On 17th January, 2002, the Group completed the disposal of its entire interest in The Hongkong Chinese Bank, Limited (“HKCB”) and its subsidiaries at a total consideration of HK$4.2 billion, giving rise to a net loss on disposal of subsidiaries of HK$10,545,000. HKCB and its subsidiaries contributed a profit before tax of HK$10,929,000 (2001 — HK$119,369,000) and profit after tax of HK$10,721,000 (2001 — HK$113,468,000) to the Group during the period.

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HONGKONG CHINESE – ANNOUNCEMENT 23RD SEPTEMBER, 2002

6. Profit/(Loss) from Operating Activities

Profit/(Loss) from operating activities is arrived at after crediting/(charging):

Investment income from held-to-maturity securities: Listed Unlisted Net realised and unrealised holding gain on other investments in securities: Listed Unlisted Net unrealised holding gain on listed held-to-maturity securities Depreciation Loss on disposal of fixed assets Amortization of goodwill arising on acquisition of subsidiaries Provision for loss on guaranteed return arrangement for fund management Tax The Company and its subsidiaries: Provision for the period: Hong Kong Overseas Tax charge for the period

Six months ended 30th June, 2002 2001 HK$’000 HK$’000 1,968 300 470 — 766 1,672 — 930 — 1,550 (3,126) (23,598) — (78) (569) — (16,502) (8,128) Six months ended 30th June, 2002 2001 HK$’000 HK$’000 203 6,234 5 28 208 6,262

7. Tax

Hong Kong profits tax has been provided for at the rate of 16 per cent. (2001- 16 per cent.) on the estimated assessable profits arising in Hong Kong for the period. Overseas tax has been calculated on the estimated assessable profits for the period at the tax rates prevailing in the countries in which the Group operates.

There were no material potential liabilities for deferred taxation as at 30th June, 2002 (2001 — Nil).

8. Earnings/(Loss) per share

• (a) Basic earnings/(loss) per share

Basic earnings/(loss) per share is calculated based on (i) the net loss from ordinary activities attributable to shareholders of HK$11,710,000 (2001 — profit of HK$123,180,000), and (ii) the number of 1,351,537,000 shares (2001 — 1,351,537,000 shares) in issue during the period.

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HONGKONG CHINESE – ANNOUNCEMENT 23RD SEPTEMBER, 2002

(b) Diluted earnings/(loss) per share

No diluted loss per share is presented for the period ended 30th June, 2002 as there were no dilutive potential ordinary shares. The diluted earnings per share for the period ended 30th June, 2001 was calculated based on (i) the net profit from ordinary activities attributable to shareholders of HK$123,180,000 and (ii) the adjusted weighted average number of 1,351,706,000 shares after taking into account the weighted average number of 169,000 ordinary shares which are deemed to have been issued at no consideration on exercise of the share options at the beginning of the period.

MANAGEMENT DISCUSSION AND ANALYSIS

Significant events during the period

On 17th January, 2002, the Group completed the disposal (the “Disposal”) of its entire interest in The Hongkong Chinese Bank, Limited (“HKCB”, together with its subsidiaries, the “HKCB Group”), then a banking subsidiary of the Company, for an aggregate consideration of HK$4.2 billion, representing a premium of approximately 30 per cent. over the consolidated net assets of HKCB immediately prior to the Disposal. The Disposal resulted in a loss of HK$10.5 million. However, after taking into account the release of goodwill of HK$827 million previously eliminated against reserves, the Disposal gave rise to a significant increase in the Group’s net assets by HK$817 million.

Following the Disposal, a special interim distribution totalling approximately HK$2.0 billion, equivalent to HK$1.45 per share, was made on 28th January, 2002. Together with the final distribution of HK$0.03 per share made on 14th June, 2002, the Company paid out a total distribution of HK$1.48 per share in the first half of 2002.

Results for the period

The full deregulation of interest rates in July 2001 made it harder for smaller banks to remain competitive. Facing stiffer competition, stagnant loan demand and deteriorating loan asset quality, the operating environment for banks in Hong Kong was much more difficult compared with the corresponding period last year.

The Disposal enabled the Group to realise its investment at an attractive premium at an appropriate time. However, the downturn in the local stock markets has adversely affected the Group’s corporate finance, securities brokerage and fund management businesses. As a result, the Group recorded a net loss attributable to shareholders of HK$11.7 million for the six months ended 30th June, 2002 (2001 — profit of HK$9.7 million after excluding the profit contribution from the HKCB Group).

During the period, the Group continued to engage in various financial services businesses and took opportunities to diversify into better yielding investments. After excluding turnover relating to the HKCB Group, it can be seen that total turnover for the period increased 38 per cent. to HK$119 million (2001 restated — HK$86.1 million), of which 51 per cent. (2001 — 14 per cent.) was attributable to treasury and securities investments, 25 per cent. (2001 — 44 per cent.) to corporate finance and securities broking businesses and 20 per pent. (2001 — 29 per cent.) to insurance business. Net income contribution from treasury and securities investments amounted to HK$25.7 million (2001 — HK$14.3 million). Net loss incurred by corporate finance and securities broking businesses and insurance business amounted to

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HONGKONG CHINESE – ANNOUNCEMENT 23RD SEPTEMBER, 2002

HK$5.7 million (2001 — income of HK$3.8 million) and HK$0.3 million (2001 — income of HK$0.5 million), respectively. Included in the other segment results during the period was a provision for loss arisen from fund management activities of HK$16.5 million (2001 — HK$8.1 million).

Financial position

The Group’s financial position was strengthened over the period. Current ratio at end of the period stood at a very healthy level of 6.5:1 (31st December, 2001 — 2.4:1). As at 30th June, 2002, the net asset value of the Group dropped HK$1.2 billion to HK$2.9 billion (31st December, 2001 — HK$4.1 billion). This was mainly due to the combined effect of the abovementioned payment of the special interim distribution during the period of approximately HK$2.0 billion and the increase in net assets from the Disposal of HK$0.8 billion. As at 30th June, 2002, consolidated net asset value per share stood at HK$2.15 (31st December, 2001 — HK$1.54, adjusted to exclude the total distributions of HK$1.48 per share during the first half of 2002). As assets held by the Group were mostly denominated in Hong Kong dollars and United States dollars, the exposure to exchange rate risk was minimal.

Gearing ratio (total borrowing to shareholders’ funds) of the Group is extremely low and stood at 1.0 per cent. at end of the period (31st December, 2001 — 1.7 per cent.). Total borrowing (excluding liabilities relating to banking operations) of the Group as at 30th June, 2002 amounted to HK$30 million. This was a bank loan which was secured by certain collateral of the clients of the Group placed on margin accounts with the Group’s securities and commodities brokerage business. These collateral have an aggregate quoted market value of HK$91.8 million as at 30th June, 2002. In comparison, the outstanding bank loan of the Group as at 31st December, 2001 of HK$69 million was unsecured. All bank loans were denominated in Hong Kong dollars, repayable within one year and carried interest at floating rates.

As at 30th June, 2002, there were no charges on the Group’s assets (31st December, 2001 — Nil). Other than those attributable to banking operations, the Group had no material capital commitments or contingent liabilities outstanding as at the end of June 2002 (31st December, 2001 — Nil).

Changes in accounting policies

Following the Disposal, the Group no longer follows the disclosure requirements as set out in the Supervisory Policy Manual “Financial Disclosure by Locally Incorporated Authorized Institutions” issued by the Hong Kong Monetary Authority. This change resulted in the restatement of the Group’s profit and loss account to conform with the current period’s presentation.

In addition, certain accounting policies of the Group and disclosure practices were changed as a result of the adoption of the new or revised accounting standards issued by the Hong Kong Society of Accountants with details as set out in Note 2 to the interim results.

These had no material impact on the results nor net asset value of the Group.

Staff and remuneration

The Group had approximately 140 employees as at 30th June, 2002. Total staff costs incurred during the period amounted to HK$36.8 million (2001 — HK$113 million). The Group offers competitive remuneration packages to its employees.

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HONGKONG CHINESE – ANNOUNCEMENT 23RD SEPTEMBER, 2002

Outlook

With the recessionary haze clinging on the economy, the outlook for profitability remains weak. In response to the challenging environment, the Group will continue to seek to diversify its income sources and enhance its asset returns. Following the Disposal, the Group has been seeking various business opportunities in the financial services-related sectors. The Group has completed the acquisition of 85 per cent. equity interest in Finibanco (Macau), S.A.R.L. (“Finibanco”), a licensed credit institution in Macau. In August 2002, Finibanco was granted a license to act as intermediary for general and life insurance products in Macau. The Group has also acquired 85 per cent. equity interest in ImPac Asset Management (Holdings) Ltd., a company engaged in fund management and the provision of investment advisory and consultancy services. With its strong and healthy financial position, the Group is well placed to actively but prudently explore investment opportunities in the financial services-related sectors in the region.

BUSINESS REVIEW AND PROSPECTS

The economic recovery in the United States had fallen short of market expectation. With little sign of economic recovery on both the local and external fronts, the Hong Kong economy remained sluggish in the first half of 2002. The volatile global equity markets and the corporate scandals in the United States had driven investors to seek capital protection rather than look for capital growth. In Hong Kong, despite low interest rate environment, rising unemployment rate, weak domestic demand and consumer spending, and declining stock and property prices dampened overall market sentiment. Although export growth showed some signs of improvement, the local GDP growth is forecasted by the Hong Kong Government to grow only 1.5 per cent. for the full year of 2002.

Amid this economic background, the Group recorded an unaudited consolidated loss attributable to shareholders for the six months ended 30th June, 2002 of HK$11.7 million.

The continuing contraction in the local stock markets adversely affected the profitability of Lippo Securities Holdings Limited, a wholly-owned subsidiary of the Company, and its subsidiaries, which are principally engaged in underwriting, securities brokerage, corporate finance, fund management, investment advisory and other related financial services.

On 17th January, 2002, the Company successfully completed the disposal of The Hongkong Chinese Bank, Limited and its subsidiaries to CITIC Ka Wah Bank Limited at an aggregate consideration of HK$4.2 billion. A special interim distribution for the year ending 31st December, 2002 totalling approximately HK$2 billion, equivalent to HK$1.45 per share, was made to the shareholders on 28th January, 2002. On 8th February, 2002, the name of the Company was changed from “The HKCB Bank Holding Company Limited” to “Hongkong Chinese Limited”.

On 27th May, 2002, the Group successfully acquired an 85 per cent. interest in the issued share capital of Finibanco (Macau), S.A.R.L. (“Finibanco”), a licensed credit institution in Macau, for MOP190 million (equivalent to approximately HK$185 million). This acquisition is consistent with the objective of the Company’s management of creating additional value for shareholders and increasing its investment in the investment banking and financial service sector. China’s accession to the World Trade Organization and Macau’s close proximity to the Pearl River Delta are expected to further enhance the tourism and the financial and business activities in the territory. It is expected that Finibanco will offer the Company a platform to extend its financial services at an important traffic and commercial hub at the mouth of the Pearl River Delta.

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HONGKONG CHINESE – ANNOUNCEMENT 23RD SEPTEMBER, 2002

On 28th May, 2002, the Group also acquired an 85 per cent. interest in the issued share capital of ImPac Asset Management (Holdings) Ltd. which, through its subsidiaries, provides investment and management advisory services in relation to mutual funds in Hong Kong and Asia. The acquisition will compliment the existing fund management business of the Group.

Looking ahead, it looks like the recessionary haze will cling on the Hong Kong economy for a little while longer until economic recovery picks up in the United States and the Japanese economy starts moving again. Domestically, the structural adjustments in the Hong Kong economy have a little more way to go. Against this background, we expect that the Hong Kong economy will remain sluggish for the forthcoming months.

Despite the challenging business environment, Hong Kong can be expected to benefit from China’s accession to World Trade Organization and the prosperity and increasing trade flows this would produce. Recent statistics released by the Hong Kong Government may suggest early signs of Hong Kong coming out of recession when a 0.5 per cent. growth in GDP was recorded in the second quarter of 2002.

With its strong and healthy financial position, the Group is well placed to explore investment opportunities in the financial and investment sectors. However, given the present challenging economic environment, management will take a cautious and prudent approach in assessing new investment opportunities.

INTERIM DISTRIBUTION

The Directors have resolved to declare the payment of an interim distribution of HK1.5 cents (2001 — interim dividend of HK1.5 cents) per share for the six months ended 30th June, 2002, which will be paid on Tuesday, 22nd October, 2002 to the shareholders whose names appear on the Company’s Register of Members on Wednesday, 16th October, 2002.

CLOSURE OF REGISTER OF MEMBERS

The Register of Members of the Company will be closed from Wednesday, 9th October, 2002 to Wednesday, 16th October, 2002 (both dates inclusive) during which period no transfer of shares will be registered. In order to qualify for the interim distribution for the six months ended 30th June, 2002, all transfers of shares accompanied by the relevant share certificates and transfer forms must be lodged with Tengis Limited, the Company’s Branch Registrars in Hong Kong, at 4th Floor, Hutchison House, 10 Harcourt Road, Central, Hong Kong not later than 4:00 p.m. on Tuesday, 8th October, 2002. Warrants in respect of the interim distribution will be despatched to the shareholders on or about Tuesday, 22nd October, 2002.

PURCHASE, SALE OR REDEMPTION OF SECURITIES

During the six months ended 30th June, 2002, there was no purchase, sale or redemption of the securities of the Company by the Company or any of its subsidiaries.

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HONGKONG CHINESE – ANNOUNCEMENT 23RD SEPTEMBER, 2002

COMPLIANCE WITH CODE OF BEST PRACTICE

None of the Directors is aware of information that would reasonably indicate that the Company is not, or was not for any part of the period during the six months ended 30th June, 2002, in compliance with the Code of Best Practice as set out in Appendix 14 of the Rules Governing the Listing of Securities (the “Listing Rules”) on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”), except that non-executive Directors were not appointed for a specific term but are subject to retirement by rotation at the Company’s annual general meetings in accordance with bye-law 87 of the Company’s Bye-laws.

INTERIM REPORT

The interim report of the Group for the six months ended 30th June, 2002 containing all the information required by paragraphs 46(1) to 46(6) of Appendix 16 of the Listing Rules will be published on the Stock Exchange’s website in due course.

By Order of the Board Hongkong Chinese Limited Dr. Mochtar Riady Chairman

23rd September, 2002

* For identification purpose only

Please also refer to the published version of this announcement in The Standard.

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HONGKONG CHINESE – ANNOUNCEMENT 23RD SEPTEMBER, 2002