The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

FAR EAST HOTELS AND ENTERTAINMENT LIMITED

(Incorporated in Hong Kong with limited liability)

CONNECTED TRANSACTION - ACQUISITION OF 25 PERCENT EQUITY INTEREST IN A NON WHOLLY-OWNED SUBSIDIARY

The Company announces that on 15 October 2002, the Purchasers, comprising an indirectly wholly-owned subsidiary and a directly wholly-owned subsidiary of the Company, entered into the Agreement to acquire 25 percent equity interest in Tradeland from the Vendor, Mr. Li Fenglin. The aggregate consideration of HK$37 million for the Acquisition has been arrived at after arm's length negotiations between the parties to the Agreement. The Company currently indirectly owns 75 percent equity interest in Tradeland. Upon Completion, Tradeland will become an indirectly wholly-owned subsidiary of the Company.

Given that the Vendor is a director and a substantial shareholder of Tradeland, the Acquisition constitutes a connected transaction of the Company pursuant to the Listing Rules. Accordingly, the Agreement is subject to approval of the Shareholders at the EGM. The Independent Board Committee has been appointed by the Board to advise the Shareholders as to whether the terms of the Acquisition are fair and reasonable so far as the interest of the Shareholders of the Company is concerned. Taiwan Securities (HK) Co Ltd has also been appointed as the independent financial advisor by the Company to advise the Independent Board Committee in this respect.

A circular containing, amongst other things, the details of the terms of the Agreement, the advice of the Independent Board Committee, the advice of the independent financial advisor, a property valuation report conducted by Vigers Hong Kong Limited, an independent professional property valuer and a notice of the EGM to approve the Agreement, will be dispatched to the Shareholders as soon as practicable. The Vendor and his associates do not have any equity interest in the Company. No shareholders of the Company shall be abstained from voting at the EGM.

The Board has noted the recent movements in the price and trading volume of the shares of the Company and wishes to state that it is not aware of the reasons for such movements other than the connected transaction as disclosed in this announcement. The Board also confirms that there are no negotiations or agreements relating to intended acquisitions or realizations which are discloseable under paragraph 3 of the Listing Agreement, neither is the Board aware of any matter discloseable under the general obligation imposed by paragraph 2 of the Listing Agreement, which is or may be of a price sensitive nature.

At the request of the Company, trading in the shares of the Company has been suspended with effect from 10:47 a.m. on 16 October 2002 pending release of this announcement. Application has been made to the Stock Exchange for the resumption of trading in the shares of the Company with effect from 9:30 a.m. on 17 October 2002.

THE SALES AND PURCHASE AGREEMENT, DATED 15 OCTOBER 2002

Parties

Vendor : Mr. Li Fenglin, one of the directors of Tradeland, who owns 25 percent equity interest in Tradeland and does not have any shareholding interest in the Company. The Vendor will resign from the board of directors of Tradeland following the completion of the Acquisition;

Purchasers : Oneyon Limited, an indirectly wholly-owned subsidiary of the Company incorporated in Hong Kong, together with Garmelo Secretarial Limited, a directly wholly-owned subsidiary of the Company incorporated in Hong Kong. Prior to the Acquisition, Oneyon Limited holds 75% interest in Tradeland. Following the Acquisition, Oneyon Limited will hold 99.99% interest in Tradeland and Garmelo Secretarial Limited will hold 0.01% interest in Tradeland.

Assets acquired

Sale Shares, a total of 62,500 shares in Tradeland, representing 25 per cent of the total issued share capital of Tradeland. 62,499 shares in Tradeland will be acquired by Oneyon Limited and the remaining one share will be acquired by Garmelo Secretarial Limited.

Tradeland, a non wholly-owned subsidiary of the Company, is currently owned as to 75 percent by the Purchasers and as to 25 percent by the Vendor. Upon Completion, Tradeland will become an indirectly wholly-owned subsidiary of the Company.

Consideration and payment terms

The total consideration of HK$37 million for the Acquisition has been arrived at after arm's length negotiations between the parties to the Agreement with regards to the prospects and the redevelopment potential of the Land. Such consideration, which has been determined with reference to the net tangible asset value of Tradeland as at 31 March 2002 adjusted for the valuation of the Land obtained from the independent professional property valuer and the cost of approximately HK$26 million required to pay for the land premium for the redevelopment of the Land. It will be supported by a valuation report prepared by Vigers Hong Kong Limited,

an independent professional property valuer, with reference to the fair market value of the Land and the redevelopment plan for the Land already approved by the local government authorities. The total consideration will be satisfied by internal resources. Upon signing of the Agreement, the Purchasers have already deposited HK$10 million to Messers. Laurence Pang & Co. as stakeholders, which shall be released to the Vendor upon Completion, and the balance of HK$27 million shall be paid upon Completion.

Conditions of the Acquisition

The Acquisition is conditional on the fulfillment of the following:

(1) Vigers Hong Kong Limited, an independent professional property valuer, provides a valuation report of the Land with reference to the fair market value of the Land and the redevelopment plan for the Land already approved by the local government authorities;

(2) the transfer of the Sale Shares contemplated under the Agreement is approved by the board of directors of the Company; and

(3) the passing at the EGM by the Shareholders of the Company of the relevant ordinary resolution to approve the Acquisition.

Subject to the conditions being satisfied within three months from the date of approval by the Shareholders of the Company or such later date as shall be agreed in writing by the Purchaser and the Vendor, Completion shall take place immediately.

The Directors consider that the Agreement has been entered into on normal commercial terms and that the terms of the Agreement are fair and reasonable and are in the best interests of the Company and the Shareholders as a whole. The Independent Board Committee has been appointed by the Board to advise the Shareholders as to whether the terms of the Acquisition are fair and reasonable so far as the interest of the Shareholders of the Company is concerned. Taiwan Securities (HK) Co Ltd has also been appointed as the independent financial advisor by the Company to advise the Independent Board Committee in this respect.

The Vendor and his associates do not have any equity interest in the Company. No shareholders of the Company shall be abstained from voting at the EGM.

INFORMATION ON TRADELAND AND BJ HAI LIAN

Tradeland is a company incorporated in Hong Kong in October 1994. It is principally engaged in the investment holding of 90 percent equity interest in BJ Hai Lian, which wholly owns Beijing Warwick International Apartments and has, as stipulated in the business license, the right to carry out businesses in property leasing, leasing of business facilities, entertainment services, food and beverage catering for 30 years commencing from 29 May 1995 to 28 May 2025 over the piece of land where Beijing Warwick International Apartments are located. The Land is situated at 北京市崇文區廣渠門南水關甲七號院 (No. A7, Nam Shui Guan, Guang Qu Men, Chong Wen District, Beijing), which has a site area of approximately 13,900 square metres. Ye Jin

has the land use right for the Land. It has been agreed that the land use right will be transferred from Ye Jin to BJ Hai Lian but the consideration and the time for the transfer have not been determined. The shareholding structure of BJ Hai Lian will remain unchanged following the transfer of the land use right. Presently, Beijing Warwick International Apartments operate as service apartments there. Consolidated net losses for Tradeland were HK$2.6 million and HK$3.7 million for the year ended 31 March 2001 and 31 March 2002 respectively. The consolidated net tangible asset values of Tradeland were negative HK$13 million and negative HK$16.6 million as at 31 March 2001 and 31 March 2002 respectively.

The remaining 10 percent equity interest in BJ Hai Lian was equally held by Ye Jin and Hai Heng. Each of Ye Jin and Hai Heng and their respective ultimate beneficial owners is an independent third party not connected with the Company, any Director, chief executive or substantial shareholder of the Company or any of its subsidiaries or their respective associates for the purposes of the Listing Rules.

The Company's effective interest in BJ Hai Lian is 67.5% prior to the Acquisition and will increase to 90% following the Acquisition.

REASONS FOR THE ACQUISITION

Given China's accession to the World Trade Organization which will spur direct investment from foreign corporations, the Directors are of the view that there is immense growth potential in Beijing's residential and hotel markets. Beijing's successful bid for 2008 Olympic Games will further stimulate tourists' interest in travelling to Beijing, which will bode well for Beijing's hotel industry. In addition, the Directors consider the good re-development potential of the Land, which is situated closely to the South Second Ring Road, Beijing. On 20th August 2002, BJ Hai Lian obtained approval from the local government authorities to redevelop the Land into high rise service apartments and a hotel with total gross floor area of approximately 68,040 square metres. The Acquisition will enable the Group to have greater flexibility and control on the redevelopment of the Land. The redevelopment of the Land is expected to commence in the first half of 2003.

GENERAL

The principal activities of the Company are investment holding and provision of corporate management services to its subsidiaries. The principal activities of its subsidiaries are engaged in hotel operation, property rental, securities trading, loan financing and investment holding. Other than his shareholding and directorship in Tradeland, the Vendor and his associates are independent of and are not connected with the Company, any directors, chief executive or substantial shareholders of the Company or any of its subsidiaries or respective associates as defined in the Listing Rules. Given that the Vendor is a director and a substantial shareholder of Tradeland, the Agreement constitutes a connected transaction of the Company pursuant to the Listing Rules. Accordingly, the Agreement is subject to approval of the Shareholders at the EGM.

A circular containing, amongst other things, the details of the terms of the Agreement, the advice of the Independent Board Committee, the advice of the independent financial advisor, a property valuation report conducted by Vigers Hong Kong Limited, an independent property valuer and a notice of the EGM to approve the Acquisition, will be dispatched to the Shareholders as soon as practicable.

DEFINITIONS

“Acquisition” the acquisition of the Sale Shares pursuant to the Agreement;

“Agreement” the Sales and Purchase Agreement dated 15 October 2002 relating to the Acquisition as entered into between the Vendor and the Purchaser;

“associates” the meaning ascribed under the Listing Rules;

“BJ Hai Lian” Beijing Hai Lian Property Management Company Limited (北京海聯物業管理有限公司), an equity joint venture established in the PRC under and by virtue of a joint venture agreement made between Ye Jin Hai Heng and Tradeland in April 1995 (approved by 北京市工商行政管理局 on 29 May 1995) and a supplementary agreement entered into between冶金,海恆 and Tradeland approved by 北京市對外經濟貿易委員會 on 18 July 1996;

“Board” the board of Directors of the Company;

“Company” Far East Hotels and Entertainment Limited, a company incorporated in Hong Kong whose shares are listed on the Stock Exchange;

“Completion” completion of the Agreement;

“Consideration” an aggregate consideration of HK$37 million for the Sale Shares, to be paid in cash;

“Director(s)” the director(s) of the Company;

“EGM” the extraordinary general meeting of the Company to be convened for approving the Acquisition;

“HK$” the lawful currency of Hong Kong SAR;

“Hong Kong” the Hong Kong Special Administrative Region of the PRC;

“Land” the piece of land situated at 北京市崇文區廣渠門南水關甲七號院 (No. A7, Nam Shui Guan, Guang Qu Men, Chong Wen District, Beijing) which has a site area of approximately 13,900 square metres;

“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange;

“Ye Jin” and “Hai Heng” Ye Jin Industrial Publisher Printing Company (冶金工業出版社印刷廠) and Hai Heng Industries Company (海恆實業總公司), each of which owns 5 percent equity interest in BJ Hai Lian;

“Purchasers” Oneyon Limited and Garmelo Secretarial Limited, both of which are companies incorporated in Hong Kong. Oneyon Limited is an indirectly wholly-owned subsidiary, and Garmelo Secretarial Limited is a directly owned subsidiary of the Company;

“Sale Shares” a total of 62,500 shares in Tradeland, representing 25 percent of the total issued share capital of Tradeland;

“Shareholders” the holders of the shares of the Company;

“Tradeland” Tradeland Investments Limited, a company incorporated on 4 October 1994 in Hong Kong with limited liability;

“Vendor” Mr. Li Fenglin, a director and a substantial shareholder of Tradeland

By Order of the Board of FAR EAST HOTELS AND ENTERTAINMENT LIMITED Derek Chiu Managing Director

Hong Kong SAR, 16 October 2002

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

AI assistant

Guoco Group Limited Capital/Financing Update 2002

48904_rns_2002-10-16_fff28f59-5816-4be1-aed2-e828e6e60ec2.pdf

FAR EAST HOTELS AND ENTERTAINMENT LIMITED

CONNECTED TRANSACTION - ACQUISITION OF 25 PERCENT EQUITY INTEREST IN A NON WHOLLY-OWNED SUBSIDIARY

THE SALES AND PURCHASE AGREEMENT, DATED 15 OCTOBER 2002

Parties

Assets acquired

Consideration and payment terms

Conditions of the Acquisition

INFORMATION ON TRADELAND AND BJ HAI LIAN

REASONS FOR THE ACQUISITION

GENERAL

DEFINITIONS

AI assistant

Guoco Group Limited — Capital/Financing Update 2002

48904_rns_2002-10-16_fff28f59-5816-4be1-aed2-e828e6e60ec2.pdf

FAR EAST HOTELS AND ENTERTAINMENT LIMITED

CONNECTED TRANSACTION - ACQUISITION OF 25 PERCENT EQUITY INTEREST IN A NON WHOLLY-OWNED SUBSIDIARY

THE SALES AND PURCHASE AGREEMENT, DATED 15 OCTOBER 2002

Parties

Assets acquired

Consideration and payment terms

Conditions of the Acquisition

INFORMATION ON TRADELAND AND BJ HAI LIAN

REASONS FOR THE ACQUISITION

GENERAL

DEFINITIONS

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Guoco Group Limited Capital/Financing Update 2002