Guoco Group Limited — Capital/Financing Update 2005

Jul 26, 2005

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.

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FAR EAST HOTELS AND ENTERTAINMENT LIMITED

(Incorporated in Hong Kong with limited liability) (Stock Code: 0037)

DISCLOSEABLE TRANSACTIONS ACQUISITION OF PROPERTIES

The Board announces that on 17 July 2005, (i) Purchaser 1, a wholly-owned subsidiary of the Company, entered into Provisional Agreement 1 with the Vendor, pursuant to which Purchaser 1 agreed to acquire from the Vendor Property 1 for a purchase price of HK$25,400,000; and (ii) Purchaser 2, a wholly-owned subsidiary of the Company, entered into Provisional Agreement 2 with the Vendor, pursuant to which Purchaser 2 agreed to acquire from the Vendor Property 2 for a purchase price of HK$25,600,000. The purchase price for each of Property 1 and Property 2 were determined after arm’s length negotiation and were based on normal commercial terms.

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The Acquisitions constitute a discloseable transaction of the Company under Chapter 14 of the Listing Rules.

A circular containing, amongst other things, details of the Acquisitions will be sent to the shareholders of the Company in accordance with the requirements of the Listing Rules.

The Board announces that on 17 July 2005, (i) Purchaser 1, a whollyowned subsidiary of the Company, entered into Provisional Agreement 1 with the Vendor, pursuant to which Purchaser 1 agreed to acquire from the Vendor Property 1 for a purchase price of HK$25,400,000; and (ii) Purchaser 2, a wholly-owned subsidiary of the Company, entered into Provisional Agreement 2 with the Vendor, pursuant to which Purchaser 2 agreed to acquire from the Vendor Property 2 for a purchase price of HK$25,600,000. The purchase price for each of the properties were determined after arm’s length negotiation and were based on normal commercial terms.

Provisional Agreement 1:

Date: 17 July 2005

• Parties: (a) Vendor : Direct Win Development Limited. To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, the Vendor and its ultimate beneficial owner are independent third parties and not connected persons of the Company.

• (b) Purchaser 1: Jeanstar Limited, a wholly-owned subsidiary of the Company.

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Provisional Agreement 2:

Date: 17 July 2005 Parties: (a) Vendor : Direct Win Development Limited. (b) Purchaser 2: Brighten Heart Limited, a wholly-owned subsidiary of the Company.

Sale and purchase:

Pursuant to Provisional Agreement 1, the Vendor and Purchaser 1 entered into Formal Agreement 1 on 20 July 2005. Formal Agreement 1, which shall set out the terms of the sale and purchase of Property 1 in more detail, supersedes Provisional Agreement 1.

Pursuant to Provisional Agreement 2, the Vendor and Purchaser 2 entered into Formal Agreement 2 on 20 July 2005. Formal Agreement 2, which shall set out the terms of the sale and purchase of Property 2 in more detail, supersedes Provisional Agreement 2.

Properties:

The Development, of which Property 1 and Property 2 form part, has not yet been completed. Pursuant to Formal Agreement 1 and Formal Agreement 2, the Vendor has agreed to complete the Development in compliance with the conditions of the Government Grant relating to the Land, the building plans and Formal Agreement 1 or Formal Agreement 2 (as applicable) on or before 31 July 2006 subject to such extensions of time as may be granted by the authorized person. Property 1 is to be situate at Block 1, Floor 2, Unit B, Mount Beacon, 20 Cornwall Street, Kowloon, Hong Kong and will have a saleable area of approximately 137.738 square metres (approximately 1,500 square feet). Property 2 is to be situate at Block 1, Floor 7, Unit B, Mount Beacon, 20 Cornwall Street, Kowloon, Hong Kong and will also have a saleable area of approximately 137.738 square metres (approximately 1,500 square feet).

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Purchase Price:

The purchase price for Property 1 is HK$25,400,000 and the purchase price for Property 2 is HK$25,600,000.

The purchase price for each of the properties were determined after arm’s length negotiation between Purchaser 1 or Purchaser 2 (as applicable) and the Vendor, an independent third party. No valuation of Property 1 or Property 2 has been done by Purchaser 1 or Purchaser 2. The Acquisitions will be funded as to approximately 70% by bank facilities secured by the grant of mortgage over the Properties and as to approximately 30% by internal resources of the Group.

Terms of Payment:

(i) Property 1

The purchase price shall be paid by Purchaser 1 to the Vendor’s solicitors as stakeholders in the following manner:

• (a) an initial deposit of HK$1,270,000 has been paid by Purchaser 1 upon the signing of Provisional Agreement 1;

• (b) HK$1,270,000 has been paid by Purchaser 1 as part payment of the purchase price upon the signing of Formal Agreement 1;

• (c) HK$1,270,000 will be payable by Purchaser 1 towards part payment of the purchase price on or before 14 September 2005;

• (d) HK$1,270,000 will be payable by Purchaser 1 towards part payment of the purchase price on or before 11 January 2006; and

• (e) the balance of the purchase price of HK$20,320,000 will be payable within 14 days of Purchaser 1 being notified in writing that the Vendor is in a position validly to assign Property 1 to Purchaser 1.

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(ii) Property 2

The purchase price shall be paid by Purchaser 2 to the Vendor’s solicitors as stakeholders in the following manner:

• (a) an initial deposit of HK$1,280,000 has been paid by Purchaser 2 upon the signing of Provisional Agreement 2;

• (b) HK$1,280,000 has been paid by Purchaser 2 as part payment of the purchase price upon the signing of Formal Agreement 2;

• (c) HK$1,280,000 will be payable by Purchaser 2 towards part payment of the purchase price on or before 14 September 2005;

• (d) HK$1,280,000 will be payable by Purchaser 2 towards part payment of the purchase price on or before 11 January 2006; and

• (e) the balance of the purchase price of HK$20,480,000 will be payable within 14 days of Purchaser 2 being notified in writing that the Vendor is in a position validly to assign Property 2 to Purchaser 2.

Completion:

The Vendor shall notify Purchaser 1 and Purchaser 2 respectively in writing that it is in a position validly to assign Property 1 or Property 2 (as applicable) within one month of the issue of the Certificate of Compliance or the consent of the Director of Lands to assign, whichever shall happen first. Completion of the sale and purchase of Property 1 and Property 2 respectively shall take place within 14 days of the date of such notification. Completion is expected to take place on or about 31 July 2006.

Reasons for the Acquisitions:

In view of recent property market conditions, the Directors consider that the Acquisitions are a sound investment opportunity for the Group. The Directors believe that the Acquisitions will improve the Group’s

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operating performance and widen its asset base as well as its earnings base. The Directors (including the independent non-executive Directors) are of the view that the Acquisitions are on normal commercial terms which are fair and reasonable and in the interests of the Company and its shareholders as a whole.

The Group intends to sell the Properties if they can be sold at a appropriate price in light of the then prevailing market conditions, otherwise, the Group will hold the Properties as an investment and lease them out.

General:

The principal business activities of the Group are hotel operation, property letting, securities investment and trading, loan financing and investment holding.

To the best of the knowledge, information and belief of the Directors and having made all reasonable enquires, the principal business activity of the Vendor is property development.

The Directors (including the independent non-executive Directors) are of the view that the Acquisitions are on normal commercial terms which are fair and reasonable and in the interest of the Company and its shareholders as a whole.

Each of the Acquisitions constitute a discloseable transaction of the Company under Chapter 14 of the Listing Rules. As both Acquisitions involve the same vendor and Provisional Agreement 1 and Provisional Agreement 2 were entered into on the same date, the Acquisitions are required to be aggregated under the Listing Rules and on an aggregate basis constitute a discloseable transaction of the Company under Chapter 14 of the Listing Rules. A circular containing, amongst other things, details of the Acquisitions will be sent to the shareholders of the Company in accordance with the requirements of the Listing Rules.

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DEFINITIONS

In this announcement, the following expressions have the following meanings, unless the context otherwise requires :

“Acquisitions” the acquisition of Property 1 by Purchaser 1 and Property 2 by Purchaser 2 “Board” the board of Directors “Company” Far East Hotels and Entertainment Limited, a company incorporated in Hong Kong with limited liability whose shares are listed on the main board of the Stock Exchange

• “connected person” has the meaning ascribed to it under the Listing Rules

• “Development” the development on the Land now being constructed or to be constructed and intended to be known as “Mount Beacon”

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

• “Formal Agreement 1” the formal sale and purchase agreement dated 20 July 2005 entered into between the Vendor and Purchaser 1 in relation to the sale and purchase of Property 1

• “Formal Agreement 2” the formal sale and purchase agreement dated 20 July 2005 entered into between the Vendor and Purchaser 2 in relation to the sale and purchase of Property 2

• “Group” the Company and its subsidiaries

• “HK$” Hong Kong dollars, the lawful currency of Hong Kong

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“Land” all that piece and parcel of land known and registered in the Land Registry as New Kowloon Inland Lot No.6196

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

• “Properties” Property 1 and Property 2 “Property 1” Block 1, Floor 2, Unit B, Mount Beacon, 20 Cornwall Street, Kowloon, Hong Kong

• “Property 2” Block 1, Floor 7, Unit B, Mount Beacon, 20 Cornwall Street, Kowloon, Hong Kong

• “Provisional the provisional sale and purchase agreement Agreement 1” dated 17 July 2005 entered into between the Vendor and Purchaser 1 in relation to the sale and purchase of Property 1

• “Provisional the provisional sale and purchase agreement Agreement 2” dated 17 July 2005 entered into between the Vendor and Purchaser 2 in relation to the sale and purchase of Property 2

• “Purchaser 1” Jeanstar Limited, a wholly-owned subsidiary of the Company

• “Purchaser 2” Brighten Heart Limited, a wholly-owned subsidiary of the Company

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

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“Vendor”

Direct Win Development Limited, being an independent third party and not a connected person of the Company

On behalf of the Board

Derek Chiu

Managing Director and Chief Executive

Hong Kong, 25 July 2005

As at the date of this announcement, the executive Directors are Mr. Deacon Te-ken Chiu, Mr. Derek Chiu, Mr. Desmond Chiu, Ms. Margaret Chiu; the non-executive Directors are Mrs. Chiu Ju Ching-lan, Mr. Dick Tat-sang Chiu, Mr. David Tat-cheong Chiu, Mr. Dennis Tat-shing Chiu, Mr. Duncan Chiu; the independent non-executive Directors are Mr. Ip Shing Hing, Mr. Ng Wing Hang Patrick, Mr. Choy Wai Shek Raymond; and the alternate Directors are Mr. Chan Chi Hing (alternate Director to Mr. Deacon Te-ken Chiu) and Mr. Tang Sung Ki (alternate Director to Mr. Desmond Chiu).

Please also refer to the published version of this announcement in International Herald Tribune.

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