G-Resources Group Limited — Interim / Quarterly Report 2004

Mar 23, 2004

PALADIN LIMITED

(Incorporated in Bermuda with limited liability)

ANNOUNCEMENT OF INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2003

The Board of Directors (the “Board”) of Paladin Limited (the “Company”) announces the unaudited interim results of the Company and its subsidiaries (the “Group”) for the six months ended 31 December 2003.

CONDENSED CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED 31 DECEMBER 2003

Notes Turnover 3 Cost of sales Gross profit Other operating income Administrative expenses Loss from operations 4 Finance costs Net loss for the period Basic loss per share 6	Six months ended 31 December 2003 2002 HK$’000 HK$’000 (Unaudited) (Unaudited) 10,808 10,338 (10,771) (10,289) 37 49 83 74 (25,821) (7,328) (25,701) (7,205) (3,428) (15,821) (29,129) (23,026) (5.51) cents (4.36)cents

NOTES TO THE CONDENSED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2003

1. BASIS OF PREPARATION

The condensed financial statements have been prepared in accordance with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and with Statement of Standard Accounting Practice (“SSAP”) No. 25 “Interim Financial Reporting” issued by the Hong Kong Society of Accountants.

2. SIGNIFICANT ACCOUNTING POLICIES

The condensed financial statements have been prepared under the historical cost convention, as modified for the revaluation of certain properties.

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The accounting policies adopted are consistent with those followed in the preparation of the Group’s annual financial statements for the year ended 30 June 2003 except as described below.

In the current interim period, the Group has adopted SSAP 12 (Revised) “Income Taxes”. The principal effect of the implementation of SSAP 12 (Revised) is in relation to deferred tax. In previous years, partial provision was made for deferred tax using the income statement liability method, i.e. a liability was recognised in respect of timing differences arising, except where those timing differences were not expected to reverse in the foreseeable future. SSAP 12 (Revised) requires the adoption of a balance sheet liability method, whereby deferred tax is recognised in respect of all temporary differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, with limited exceptions. The adoption of SSAP 12 (Revised) has had no effect on the results for the current or prior interim reporting periods.

3. SEGMENT INFORMATION

The Group’s primary format for reporting segment information is business segments.

General trading Property development	Turnover Loss from operations Six months ended Six months ended 31 December 31 December 2003 2002 2003 2002 HK$’000 HK$’000 HK$’000 HK$’000 10,808 10,338 (4,431) (7,205) – – (21,270) – 10,808 10,338 (25,701) (7,205)

More than 90% of the Group’s turnover was attributable to the operations carried out in Hong Kong.

4. LOSS FROM OPERATIONS

Loss from operations has been arrived at after charging depreciation of HK$1,848,000 (2002: HK$2,300,000).

5. TAXATION

No provision for Hong Kong Profits Tax has been made in the condensed financial statements as the Group had no assessable profit for both periods.

6. BASIC LOSS PER SHARE

The calculation of the basic per share is based on the net loss for the period of HK$29,129,000 (2002: HK$23,026,000) and on 528,271,615 (2002: 528,271,615) ordinary shares in issue during the period.

MANAGEMENT DISCUSSION AND ANALYSIS

The principal activities of the Group are trading of textiles and property development.

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BUSINESS REVIEW

General trading

During the six months ended 31 December 2003, the Group’s trading division achieved a total turnover of HK$10,808,000, representing an increase of 5% over the same period last year.

Property development

The re-development of Bowen Hill Apartments is still under progress and will be completed within one year. The returns from the redevelopment will improve the Group financial structure.

LIQUIDITY, FINANCIAL RESOURCES AND CAPITAL STRUCTURE

As at 31 December 2003, net current liabilities of the Group were approximately HK$201 million. The current ratio was 0.84. The cash and bank balances on hand was approximately HK$14 million.

As at 31 December 2003, the Group has outstanding borrowings of approximately HK$1,246 million comprising (i) secured bank loans and accrued interest and other borrowings cost on bank loans of approximately HK$710 million, (ii) other loans, amount due to a shareholder and amount due to a director of subsidiaries of approximately HK$480 million and (iii) other payables and taxation payable of approximately HK$56 million. The bank borrowings are on floating interest rates basis.

The majority of the Group’s assets and borrowings are denominated either in Hong Kong dollars or US dollars thereby avoiding exposure to undesirable exchange rate fluctuations. In view of the stability of the exchange rate of HK dollars and US dollars, the directors consider that the Group has no significant exposure to exchange fluctuation and does not pledge against foreign exchange risk.

The Group’s bank loans were secured by leasehold land and buildings and properties under development held by the Group with a total net book value of approximately HK$1,107 million. The issued ordinary shares of a wholly-owned subsidiary of the Company, Holyrood Limited, were also pledged to a bank to secure credit facilities granted to the Group.

The Directors consider that it is not meaningful to publish a gearing ratio for the Group until such time as the Group is in a positive shareholders’ equity position.

SIGNIFICANT INVESTMENTS, ACQUISITIONS AND DISPOSALS

During the six months ended 31 December 2003, the Group had no material acquisitions and disposals of subsidiaries.

As at 31 December 2003, the Group had no material investment.

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EMPLOYEES AND REMUNERATION POLICIES

As at 31 December 2003, the Group employed a total of 9 employees. They were remunerated according to market conditions.

CONTINGENT LIABILITIES

As at 31 December 2003, the Company has provided guarantees to banks in respect of banking facilities granted to its subsidiaries amounting to approximately HK$705 million. The Company has also provided guarantee to a lender in respect of a term loan granted to its subsidiary amounting to approximately HK$155 million.

INTERIM DIVIDEND

The Directors of the Company do not recommend the payment of any interim dividend for the six months ended 31 December 2003.

PURCHASE, SALE AND REDEMPTION OF SHARES

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

AUDIT COMMITTEE

The interim financial report of the Group for the six months ended 31 December 2003 has not been audited by the Group’s auditors, but has been reviewed by the audit committee.

CORPORATE GOVERNANCE

The Company has complied throughout the period 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.

PUBLICATION OF RESULT ON THE STOCK EXCHANGE Information Required by paragraphs 46(1)-46(6) of Appendix 16 of the Listing Rules will be published on the website of the Stock Exchange in due course.

By order of the Board Law Fong Acting Chairmen

Hong Kong, 23 March 2004

Please also refer to the published version of this announcement in China Daily.

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