Guoco Group Limited — Interim / Quarterly Report 2002

Dec 16, 2002

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FAR EAST HOTELS AND ENTERTAINMENT LIMITED

(Incorporated in Hong Kong with limited liability)

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2002

INTERIM RESULTS

The Board of Directors of Far East Hotels And Entertainment Limited (the “Company”) announces the unaudited interim financial results of the Company and its subsidiaries (the “Group”) for the six months ended 30 September 2002 as follows:

CONDENSED CONSOLIDATED INCOME STATEMENT

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2002

Notes Turnover 2 Cost of sales Gross profit Administrative expenses Other operating expenses 4 Loss from operations Finance costs Share of results of associates Profit (Loss) before taxation Taxation 5 Profit (Loss) before minority interests Minority interests Net profit (loss) attributable to shareholders Earnings (Loss) per share – Basic 6	Six months ended 30 September 2002 2001 (unaudited) (unaudited) HK$ HK$ 32,420,855 11,493,477 (12,467,316) (10,910,003) 19,953,539 583,474 (9,855,367) (5,991,105) (34,825,389) (791,486) (24,727,217) (6,199,117) (2,783,474) (1,945,491) 110,679,379 (146,572) 83,168,688 (8,291,180) 21,430,500 – 61,738,188 (8,291,180) 682,766 358,414 62,420,954 (7,932,766) Cents Cents 12.77 (1.62)

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Notes

1. Principal Accounting Policies

These unaudited condensed consolidated financial statements for the period of the Group 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 (“Listing Rules”) and Statement of Standard Accounting Practice (“SSAP”) 25 “Interim Financial Reporting” issued by the Hong Kong Society of Accountants.

The accounting policies adopted are consistent with those followed in the preparation of the Group’s consolidated financial statements for the year ended 31 March 2002, except for the adoption of the following revised and new SSAPs which are effective for the first time for the period:

SSAP 1 (Revised) : Presentation of financial statements SSAP 11 (Revised) : Foreign currency translation SSAP 15 (Revised) : Cash flow statements SSAP 25 (Revised) : Interim financial reporting SSAP 34 : Employee benefits

The adoption of these SSAPs has resulted in changes in the format of presentation of the condensed consolidated cash flow statement and the condensed consolidated statement of changes in equity, but has no material effect on the results for the current or prior accounting periods.

2. Business And Geographical Segments

Business segments

2002 Turnover Segment result Finance costs Share of results of associates Profit before taxation Taxation Profit before minority interests Minority interests Profit for the period	Hotel operation HK$ 5,615,277 289,333 – –	Property rental HK$ 3,019,903 (37,056,082) – –	Securities Loan Investment trading financing holding HK$ HK$ HK$ Six months ended 30 September (unaudited) 182,924 23,054,635 548,116 (1,707,851) 21,571,304 (5,894,602) – 135,790,674 (25,111,295) – (21,430,500) –	Others HK$ – (1,929,319) – –	Consolidated HK$ 32,420,855
					(24,727,217) (2,783,474) 110,679,379
					83,168,688 (21,430,500)
					61,738,188 682,766
					62,420,954

Profit for the period

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2001

Turnover Segment result Finance costs Share of results of associates Loss before taxation Taxation Loss before minority interests Minority interests Loss for the period	5,086,136 560,704 –	4,407,176 (2,128,157) –	82 (640,642) –	1,931,441 1,447,198 (3,000)	68,642 (4,543,284) (143,572)	– (894,936) –	11,493,477 (6,199,117) (1,945,491) (146,572) (8,291,180) – (8,291,180) 358,414 (7,932,766)

Geographical segments

Hong Kong People’s Republic of China	Sales revenue by geographical market (unaudited) (unaudited) HK$ HK$ 2002 2001 29,513,452 7,086,301 2,907,403 4,407,176 32,420,855 11,493,477	Contribution to profit (loss) from operation (unaudited) (unaudited) HK$ HK$ 2002 2001 12,130,829 (4,387,202) (36,858,046) (1,811,915) (24,727,217) (6,199,117)

3. Depreciation

During the period, depreciation of HK$1,798,572 (2001: HK$2,601,076) was charged in respect of the Group’s property, plant and equipment.

4. Other Operating Expenses

During the period, the directors have assessed the carrying value of the leasehold buildings and improvement of Beijing Warwick International Apartments, an impairment loss in respect of leasehold buildings and improvement of approximately HK$34.80 million was recognized.

5. Taxation

The amount represents share of taxation attributable to an associate. Other than that, no provision for Hong Kong Profits Tax has been made in the financial statements as the Company and its subsidiaries incurred tax losses in both the current and the prior interim reporting period.

6. Earnings (Loss) Per Share

• (a) Basic earnings (loss) per share

The calculation of basic earnings (loss) per share is based on the Group’s profit attributable to shareholders of HK$62,420,954 (2001: loss of HK$7,932,766) and on the 488,842,675 (2001: 488,842,675) shares in issue during the period.

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• (b) Diluted earnings (loss) per share

No diluted earnings (loss) per share has been presented because the exercise prices of the outstanding share options of the Company were greater than the average market price of shares for both the current and the prior interim reporting period.

INTERIM DIVIDEND

The Board has resolved not to declare any interim dividend in respect of the six months ended 30 September 2002 (2001: Nil).

REVIEW OF OPERATIONS AND PROSPECT

The businesses of the Group, except Beijing Warwick International Apartments, remain stable during the period under review despite the economic downturn. In view of the global economic climate, the directors had taken and pursue several corporate exercises with the intention to rationalise the activities of the Group.

The directors have assessed the carrying value of the leasehold buildings and improvement of Beijing Warwick International Apartments, an impairment loss in respect of leasehold buildings and improvement of approximately HK$34.80 million was recognized.

During the period, the directors of an associated company of the Company, Bolan Holdings N.V. has revalued its interest in land situated in Sydney, Australia and made a diminution of asset value by US$7 million and the Group has shared the value in proportion to the equity interest held.

On 28 November 2002, the Shareholders of the Company at the extraordinary general meeting has passed a resolution to acquire 25 percent equity interest in Tradeland Investments Limited (“Tradeland”) at a consideration of HK$37 million. Before acquisition, the Company indirectly owns 75 percent equity interest in Tradeland. Upon completion of the acquisition, Tradeland will become an indirectly wholly-owned subsidiary of the Company. The acquisition will enable the Group to have greater flexibility and control on the redevelopment of the land situated at No. A7, Nam Shui Guan, Guang Qu Men, Chong Wen District, Beijing（北京市崇文區廣渠門南 水關甲七號院）.

As to our joint venture development, Nob Hill, the certificate of compliance was issued in September 2002 and vacant possession of the residential units were delivered to the purchasers accordingly.

The Group acquired a carport podium situated at Nelson Street of Mongkok, Kowloon consisting of 4 floors with 88 registered car parking spaces and a total gross floor area of approximately 29,400 square feet.

EMPLOYEES

The Group has approximately 110 employees. Employees are remunerated according to nature of the job and market trend, with build-in merit component incorporated in the annual increment to reward and motivate individual performance.

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FINANCE ACTIVITIES

At the interim reporting date, the Group had bank loans and overdraft facilities amounted to HK$197,163,402 (31/03/2002: HK$199,265,883), of which HK$147,784,901 (31/03/2002: HK$192,265,883) were utilised. These facilities were secured by legal mortgages over the Group’s properties and deposits with an aggregate net book value of HK$90,854,448 (31/03/ 2002: HK$57,449,788) and HK$2,148,715 (31/03/2002: HK$2,136,010) respectively.

At 30 September 2002, the Group had no material exposure under foreign exchange contracts, interest or currency swaps or other financial derivatives.

Shareholders’ funds at 30/09/2002 amounted to approximately HK$646 million (31/03/2002: approximately HK$584 million). Accordingly, the Group’s gearing ratio (total bank loans and overdraft facilities utilised to shareholders’ funds) at 30/09/2002 is 23% (31/03/2002: 33%).

DISCLOSURE UNDER PRACTICE NOTE 19 TO THE LISTING RULES

As at 30 September 2002, the Group advanced a total of approximately HK$148 million to an associate, Central More Limited. The balance due includes an amount in respect of land transferred of approximately HK$136 million and accumulated accrued interest charged thereon of approximately HK$12 million. The balance is interest bearing at the Hong Kong Prime Rate, unsecured and has no fixed repayment term.

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

During the six months ended 30 September 2002, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed securities.

AUDIT COMMITTEE

The Audit Committee has reviewed with management the accounting policies adopted by the Group and discussed internal controls and financial reporting matters including a review of the unaudited interim financial results for the six months ended 30 September 2002 with Directors.

CODE OF BEST PRACTICE

None of the directors of the Company is aware of any information that would reasonably indicate that the Company is not, or was not for any part of the six months ended 30 September 2002, in compliance 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.

DISCLOSURE OF INFORMATION ON THE WEBSITE OF THE STOCK EXCHANGE

The financial and other information required by Paragraphs 46(1) to 46(6) of Appendix 16 of the Listing Rules will be published on the website of the Stock Exchange in due course.

Derek Chiu

Managing Director & Chief Executive

Hong Kong, 13 December 2002

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

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