G-Resources Group Limited — Earnings Release 2001

Oct 29, 2001

PALADIN LIMITED

(Incorporated in Bermuda with limited liability)

ANNOUNCEMENT OF RESULTS

FOR THE YEAR ENDED 30 JUNE, 2001

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, 2001 together with comparative figures for the previous year as follows:

Year Ended 30 June

2001 2000

Notes HK$'000 HK$'000

Turnover 2 2,193 23,296

Cost of sales and services (4,934 ) (22,761 )

Gross (loss) profit (2,741 ) 535

Other revenue 4,082 1,101

Distribution costs - (5,011 )

Administrative expenses (14,885 ) (21,002 )

Impairment loss in respect of leasehold

land and buildings (50,000 ) -

Reversal of provision (provision) for bad and

doubtful debts 7,860 (17,616 )

Impairment loss in respect of investment securities - (7,575 )

Write off of property, plant and equipment on closure

of restaurant operations - (4,171 )

Impairment loss in respect of club debenture - (1,900 )

Loss from operations (55,684 ) (55,639 )

Finance costs (73,310 ) (69,728 )

Net loss for the year (128,994 ) (125,367 )

Basic loss per share 4 (24.4 cents ) (23.7 cents )

Notes:

1. BASIS OF PREPARATION

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$152,767,000 as at 30 June, 2001. The Group is dependent upon the financial support of its bankers and other lenders. The Group has reached agreement with its bankers for the extension of repayment of certain of its secured bank loans (including accrued interest) amounting to approximately HK$668 million as at 30 June, 2001 to April 2002 when it is estimated that the properties held under development will be complete and available for sale or pre-sale, the unused facilities available to the Group as at 30 June, 2001 of approximately HK$162 million will be used to finance the completion of the development. Taking into account the estimated proceeds from the disposal of the properties held under development, the directors consider that, with the continuing support of the Group's bankers and other lenders, the Group will be able 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. TURNOVER

Turnover represents the aggregate of the amounts received and receivable for goods sold and services rendered and the income from restaurant operations during the year. An analysis of turnover is as follows:

2001 2000

HK$'000 HK$'000

Continuing operations

• Service fee 2,193 -

• Sales of goods - 21,992

2,193 21,992

Discontinued operations

• Restaurant operations - 1,304

2,193 23,296

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 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$128,994,000 (2000:HK$125,367,000) and on 528,271,615 (2000:528,271,615) ordinary shares in issue during the year.

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. The Group has reached agreement with its bankers for the extension of repayment of certain of its secured bank loans (including accrued interest) amounting to approximately HK$668 million as at 30 June, 2001 to April 2002 when it is estimated that the properties held under development will be complete and available for sale or pre-sale. The unused facilities available to the Group as at 30 June, 2001 of approximately HK$162 million will be used to finance the completion of the development. Taking into account the estimated proceeds from the disposal of the properties held under development, the directors consider that, with the continuing support of the Group's bankers and other lenders, the Group will be able to meet in full its 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 (2000: Nil).

CLOSURE OF REGISTER OF MEMBERS

The Register of Members of the Company will be closed from 11 December, 2001 to 14 December, 2001, both days inclusive, during which period no transfer of shares will be effected.

BUSINESS REVIEW

During the year, the principal activity of the Group is the re-development of Bowen Hill Apartments situated at No. 10-12 Peak Road, Hong Kong. The re-development project is progressing according to schedule. The Group views the future of the new luxurious properties, when completed after re-development, with confidence, which will hopefully bring profit to the Group.

PLANS AND PROSPECT

The re-development project will be completed by mid 2002. Looking ahead, the Group will continue to look for suitable business investments.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES

During the year ended 30 June, 2001, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed securities.

COMPLIANCE WITH CODE OF BEST PRACTICE

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 except that there were only one member in the Company's Audit Committee for the period up to 31 January, 2001.

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(1) to 45(3) of Appendix 16 of the Listing Rules will be published on the website of The Stock Exchange of Hong Kong Limited in due course.

By order of the Board

Law Fong

Acting Chairman

Hong Kong, 26 October, 2001

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 14 December, 2001 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, 2001;

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 percent 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."

1. 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 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."

1. 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, 26 October, 2001

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, Central Registration Hong Kong 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 11 December, 2001 to 14 December, 2001 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.

5. 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, 2001.

Please also refer to the published version of this announcement in the Hong Kong iMail.