G-Resources Group Limited — Annual Report 2002

Oct 30, 2002

PALADIN LIMITED

(Incorporated in Bermuda with limited liability)

ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 30 JUNE 2002

The board of directors (the “Board”) of Paladin Limited (the “Company”) is pleased to announce the audited consolidated results of the Company and its subsidiaries (the “Group”) for the year ended 30 June 2002 together with comparative figures for the previous year as follows:

Notes Turnover 2 Cost of sales and services Gross profit/(loss) Other operating income Administrative expenses Impairment loss recognised in respect of leasehold land and buildings Reversal of allowance for bad and doubtful debts Loss from operations Finance costs Net loss for the year Basic loss per share 4	Year ended 30 June 2002 2001 HK$’000 HK$’000 18,576 2,193 (18,462) (4,934) 114 (2,741) 433 4,082 (16,965) (14,885) (16,000) (50,000) – 7,860 (32,418) (55,684) (5,305) (73,310) (37,723) (128,994) (7.1 cents) (24.4 cents)

Notes:

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

In preparing the financial statements, the directors have given careful consideration to the future liquidity of the Group in the light of its net current liabilities of HK$150,955,000 as at 30 June 2002. The Group is dependent upon the financial support of its bankers and other lenders. In July 2002, the Group reached an agreement with its bankers for a further postponement of the repayment date for certain of its secured bank loans (including accrued interest) amounting to approximately HK$674 million as at 30 June 2002 to April 2003. The unused facilities available to the Group as at 30 June 2002 of approximately HK$129 million will be used to finance the completion of the development. Although the main contractor of the properties held under development terminated their contract in August 2002, a shortlist of potential new main contractors has been complied which is currently awaiting the bankers’ approval under the terms of the loan agreement. With a new main contractor to be appointed shortly, the directors estimate that the properties held under development will be complete and available for sale or pre-sale in April 2003. Against this background, the directors consider that, with the continuing support of the Group’s bankers and other lenders, the Group will be able to complete the development and to meet in full its financial obligations as they fall due for the foreseeable future. Accordingly, the financial statements have been prepared on a going concern basis.

2. BUSINESS AND GEOGRAPHICAL SEGMENTS

Business segments

For management purposes, the Group is currently organised into two main operating divisions – general trading and property development. These divisions are the basis on which the Group reports its primary segment information. The business of the provision of agency services has been temporarily suspended since the beginning of the current year.

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Segment information about these businesses is presented below:

Year 2002

Income statement

REVENUE External sales RESULT Segment result Impairment loss recognised in respect of leasehold land and buildings Loss from operations Finance costs Net loss for the year	General Property trading development Consolidated HK$’000 HK$’000 HK$’000 18,576 – 18,576 (15,293) (1,125) (16,418) (16,000) (32,418) (5,305) (37,723)

Year 2001

Income statement

REVENUE External sales RESULT Segment result Impairment loss recognised in respect of leasehold land and buildings Loss from operations Finance costs Net loss for the year	General trading HK$’000 – 4,733	Provision Discontinued of agency Property restaurant services development operations Consolidated HK$’000 HK$’000 HK$’000 HK$’000 2,193 – – 2,193 (13,295) – 2,878 (5,684) (50,000) (55,684) (73,310) (128,994)

Geographical segments

More than 90% of the Group’s turnover for the year ended 30 June 2002 and 2001 were attributable to operations carried out in Hong Kong.

3. TAXATION

No provision for Hong Kong Profits Tax has been made in the financial statements as the Company and its subsidiaries had no assessable profit the both years.

No provision for deferred taxation has been made in the financial statements as there were no significant timing differences arising during the year or at the balance sheet date.

No provision for deferred taxation has been made for the surplus arising in previous years on the revaluation of certain of the Company’s existing properties as the profit arising on the disposal of these assets would not be subject to taxation. Accordingly, the revaluation surplus does not constitute a timing difference for tax purposes.

4. BASIC LOSS PER SHARE

The calculation of the basic loss per share is based on the net loss for the year of HK$37,723,000 (2001: HK$128,994,000) and on 528,271,615 (2001: 528,271,615) ordinary shares in issue during the year.

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5. DEPRECIATION

Depreciation on pr operty, plant and equipment for the year amounted to HK$5,497,000 (2001: HK$6,178,000).

EXTRACT FROM AUDITORS’ REPORT

Fundamental uncertainty relating to the going concern basis

In forming our opinion, we have considered the adequacy of the disclosures made in note 2 to the financial statements which explains that the Group is dependent upon the financial support of its bankers and other lenders. In July 2002, the Group reached an agreement with its bankers for a further postponement of the repayment date for certain of its secured bank loans (including accrued interest) amounting to approximately HK$674 million as at 30 June 2002 to April 2003. The unused facilities available to the Group as at 30 June 2002 of approximately HK$129 million will be used to finance the completion of the development. Although the main contractor of the properties held under development terminated their contract in August 2002, a shortlist of potential new main contractors has been compiled which is currently awaiting the bankers’ approval under the terms of the loan agreement. With a new main contractor to be appointed shortly, the directors estimate that the properties held under development will be complete and available for sale or pre-sale in April 2003. Against this background, the directors consider that, with the continuing support of the Group’s bankers and other lenders, the Group will be able to complete the development and to meet in full it financial obligations as they fall due for the foreseeable future. The financial statements have been prepared on a going concern basis, the validity of which depends upon future funding being available. The financial statements do not include any adjustments that would result from failure to obtain such funding. We consider that the fundamental uncertainty has been adequately disclosed in the financial statements and our opinion is not qualified in this respect.

DIVIDENDS

The Directors of the Company do not recommend the payment of final dividends (2001: Nil).

CLOSURE OF REGISTER OF MEMBERS

The Register of Members of the Company will be closed from 2 December 2002 to 5 December 2002, both days inclusive, during which period no transfer of shares will be effected.

MANAGEMENT DISCUSSION AND ANALYSIS

The principal activities of the Group are the trading of textiles and re-development of Bowen Hill Apartments. The re-development project is still under progress. The Company is still looking for new investment opportunities.

PROSPECT

The re-development of Bowen Hill Apartments will be completed within one year. The returns from the re-development will improve the Company financial structure.

LIQUIDITY AND FINANCIAL RESOURCES

As at 30 June 2002, net current liabilities of the Group was approximately HK$151 million (2001: HK$153 million). The current ratio was 0.84 (2001: 0.83). The cash and bank balance on hand was HK$755,000 (2001: HK$154,000).

EMPLOYEES AND REMUNERATION POLICIES

As at 30 June 2002, the Group employed a total of 14 employees. They were remunerated according to market conditions.

PURCHASE, SALE AND REDEMPTION OF SHARES

During the year, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed shares.

CORPORATE GOVERNANCE

The Company has complied throughout the year with the Code of Best Practice as set out in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

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PUBLICATION OF DETAILED ANNUAL RESULTS ON THE WEBSITE OF THE STOCK EXCHANGE OF HONG KONG LIMITED

A detailed annual results containing the information required by paragraphs 45(l) to 45(3) of Appendix 16 of the Listing Rules will be published on the website of the The Stock Exchange of Hong Kong Limited in due course.

By order of the Board Law Fong Acting Chairman

Hong Kong, 30 October 2002

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NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Annual General Meeting of the Company will be held at the Antica Room, Gold Coast Hotel, 1 Castle Peak Road, Castle Peak Bay, Kowloon, Hong Kong on 5 December 2002 at 11:00 a.m. for the following purposes.

1. to receive and consider the Financial Statements and the Reports of the Directors and Auditors for the year ended 30 June 2002;

2. to re-elect directors;

3. to fix the directors’ remuneration;

4. to appoint Deloitte Touche Tohmatsu as auditors for the ensuing year and to authorise the directors to fix their remuneration;

5. to pass the Ordinary Resolution:

“ THAT :

• (i) subject to paragraph (iii) below, the exercise by the Directors of the Company during the Relevant Period (as hereinafter defined) of all the powers of the Company to allot, issue and deal with additional shares of HK$0.50 each in the capital of the Company and to make or grant offers, agreements and options which might require the exercise of such power be and is hereby generally and unconditionally approved;

• (ii) the approval in paragraph (i) above shall authorise the Directors of the Company during the Relevant Period to make or grant offers, agreements and options which might require the exercise of such power after the end of the Relevant Period;

• (iii) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) and issued by the Directors of the Company pursuant to the approval given in paragraph (i) above, otherwise than pursuant to (i) a Rights Issue, (ii) an issue of shares as scrip dividends pursuant to the Bye-Laws of the Company from time to time, (iii) an issue of shares upon the exercise of rights of subscription or conversion under the terms of any warrants issued by the Company or any securities which are convertible into shares of the Company or (iv) an issue of shares under any option scheme or similar arrangement for the time being adopted for the grant or issue to employees of the Company and/or any of its subsidiaries of shares or rights to acquire shares of the Company, shall not exceed 20 per cent. of the aggregate nominal amount of the share capital of the Company in issue at the date of this resolution and the said approval shall be limited accordingly; and

• (iv) for the purposes of this Resolution:

“Relevant Period” means the period from the passing of this resolution until whichever is the earliest of:

• (a) the conclusion of the next annual general meeting of the Company;

• (b) the expiration of the period within which the next annual general meeting of the Company is required by Bermuda law or the Company’s Bye-Laws to be held; or

• (c) the time at which the authority set out in this resolution is revoked or varied by way of ordinary resolution in general meeting.”

• to pass the Ordinary Resolution:

“ THAT :

• (i) subject to paragraph (iii) below, the exercise by the directors of the Company during the Relevant Period (as defined below) of all the powers of the Company to repurchase issued shares in the capital of the Company on the terms and subject to the conditions

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set out in the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited be and is hereby generally and unconditionally approved;

• (ii) the approval in paragraph (i) above shall be in addition to any other authorisation given to the directors of the Company;

• (iii) the aggregate nominal amount of the shares purchased or agreed conditionally or unconditionally to be purchased by the Company pursuant to the approval in paragraph (i) above shall not exceed the aggregate of 10 percent of the aggregate nominal amount of the share capital of the Company in issue as at the time of passing this resolution; and

• (iv) for the purposes of this resolution:

“Relevant Period” means the period from the time of passing of this resolution until whichever is the earliest of:

• (a) the conclusion of the next annual general meeting of the Company;

• (b) the expiration of the period within which the next annual general meeting of the Company is required by Bermuda law or the Company’s Bye-Laws to be held; or

• (c) the time at which the authority set out in this resolution is revoked or varied by way of ordinary resolution in general meeting.”

• to pass the Ordinary Resolution:

“ THAT conditional upon the passing of ordinary resolutions numbered 5 and 6 set out above of which this resolution forms part, the aggregate nominal amount of the shares in the capital of the Company which are repurchased by the Company under the authority granted to the directors of the Company in the said ordinary resolution numbered 6 shall be added to the aggregate nominal amount of the issued share capital of the Company that may be allotted or agreed conditionally or unconditionally to be allotted by the directors of the Company pursuant to the said ordinary resolution numbered 5.”

By Order of the Board Hung Kwok Keung, Keith Company Secretary

Hong Kong, 30 October 2002

Head Office and Principal Place of Business:

45th Floor, Office Tower

Convention Plaza

1 Harbour Road

Wanchai Hong Kong

Notes:

1. Any Member entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and, on a poll, vote instead of him. A proxy need not be a member of the Company.

2. To be valid, a form of proxy, together with the power of attorney or other authority (if any) under which it is signed or a notarially certified copy thereof must be deposited at the Company’s Hong Kong Share Registrars, Computershare Hong Kong Investor Services Limited, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong not less than forty-eight hours before the time appointed for holding the meeting or any adjournment thereof.

3. The Transfer Books and Register of Members of the Company will be closed from 2 December 2002 to 5 December 2002 both days inclusive.

4. Concerning Resolution No. 5 above, approval is being sought from Members as a general mandate in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, in order to ensure flexibility and discretion to the Directors in the event that it becomes desirable to issue any shares of the Company up to 20 percent of the issued share capital.

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1. In relation to Resolution No. 6 above, the Directors wish to state that they will exercise the powers conferred thereby to purchase shares of the Company in circumstances which they deem appropriate for the benefit of the shareholders. An explanatory statement containing the information necessary to enable the shareholders to make an informed decision to vote on this Resolution as required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited will be set out in a separate document to be sent to the shareholders with the annual report for the year ended 30 June 2002.

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

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