Guoco Group Limited — Interim / Quarterly Report 2004

Dec 19, 2003

FAR EAST HOTELS AND ENTERTAINMENT LIMITED

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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 2003

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 2003. The unaudited interim financial results has been reviewed by the Company’s audit committee.

CONDENSED CONSOLIDATED INCOME STATEMENT

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2003

Notes Turnover 3 Cost of sales Gross profit Administrative expenses Other operating expenses Profit (Loss) from operations Finance costs Share of results of associates (Loss) Profit before taxation Taxation 5 (Loss) Profit before minority interests Minority interests Net (loss) profit for the period (Loss) Earnings per share-basic and diluted 6	Six months ended 30 September 2003 2002 (unaudited) (unaudited) HK$ HK$ 25,931,261 32,420,855 (14,531,647) (12,467,316) 11,399,614 19,953,539 (6,844,158) (9,855,367) (791,486) (34,825,389) 3,763,970 (24,727,217) (2,505,764) (2,783,474) (3,030,591) 110,679,379 (1,772,385) 83,168,688 35,619 21,430,500 (1,808,004) 61,738,188 – 682,766 (1,808,004) 62,420,954 Cent Cents (0.37) 12.77

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FAR EAST HOTELS AND ENTERTAINMENT LIMITED

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

1. Basis of preparation

The condensed financial statements have been prepared in accordance with the Statement of Standard Accounting Practice (“SSAP”) No. 25 “Interim Financial Reporting” issued by the Hong Kong Society of Accountants and with the applicable disclosures requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and should be read in conjunction with the 2003 annual financial statements.

2. Accounting policy

The condensed financial statements have been prepared under the historical cost convention as modified for the revaluation of investment properties and investments in securities.

The accounting policies and methods of computation used in the preparation of these unaudited condensed financial statements are consistent with those used in the Group’s annual financial statements for the year ended 31 March 2003, except that the Group has adopted the revised Statement of Standard Accounting Practice (“SSAP”) 12 “Income Taxes” issued by the Hong Kong Society of Accountants which are effective for accounting periods commencing on or after 1 January 2003. The adoption of the revised SSAP 12 has no material effect on the Group’s results.

3. Business And Geographical Segments Business segments

2003 Turnover Segment result Finance costs Share of results of associates Loss before taxation Taxation Loss before minority interests Minority interests Loss for the period 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$ 6,077,496 198,406 – – 5,615,277 289,333 – –	S Property rental HK$ 4,351,566 (2,528,577) – – 3,019,903 (37,056,082) – –	ix months end Securities trading HK$ 11,435,245 8,871,344 – – 182,924 (1,707,851) – –	ed 30 September (unaudited) Loan Investment financing holding Others HK$ HK$ HK$ 3,425,126 641,828 – 3,425,126 (5,645,895) (556,434) (2,706,200) (324,391) – – (35,619) – 23,054,635 548,116 – 21,571,304 (5,894,602) (1,929,319) 135,790,674 (25,111,295) – (21,430,500) – –	Consolidated HK$ 25,931,261
					3,763,970 (2,505,764) (3,030,591)
					(1,772,385) (35,619)
					(1,808,004) –
					(1,808,004)
					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

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FAR EAST HOTELS AND ENTERTAINMENT LIMITED

Geographical segments

Hong Kong Other regions in the People’s Republic of China	Sales revenue by geographical market 2003 2002 (unaudited) (unaudited) HK$ HK$ 23,652,927 29,513,452 2,278,334 2,907,403 25,931,261 32,420,855	Contribu profit (loss) fro 2003 (unaudited) HK$ 6,897,367 (3,133,397) 3,763,970	tion to m operation 2002 (unaudited) HK$ 12,130,829 (36,858,046) (24,727,217)

4. Depreciation And Amortisation

During the period, depreciation of HK$2,426,555 (2002: HK$1,798,572) was charged in respect of the Group’s property, plant and equipment.

During the period, amortisation of HK$942,700 (2002: HK$ Nil) was charged in respect of the Group’s intangible assets.

5. Taxation

The charge in both the current and the prior interim reporting period represent share of taxation attributable to associates.

No provision for Hong Kong Profits Tax in respect of the Company and its subsidiaries has been made in the financial statements as the Company and its subsidiaries has no assessable profit or incurred a tax loss in both the current and the prior interim reporting period.

6. (Loss) Earnings Per Share

• a) Basic (loss) earnings per share

The calculation of basic (loss) earnings per share is based on the Group’s loss for the period of HK$1,808,004 (2002: profit of HK$62,420,954) and on the 488,842,675 (2002: 488,842,675) shares in issue during the period.

• b) Diluted (loss) earnings per share

The computation of diluted (loss) earnings per share has not assumed the exercise of the outstanding share options of the Company since their exercise prices were greater than the average market price of shares for each of 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 2003 (2002: Nil).

REVIEW OF OPERATIONS AND PROSPECTS

Cheung Chau Warwick Hotel has successfully captured more local business with turnover on food and beverage section increased by 16% compared with last interim period. The business of room section remains stable during the period. However, the business of Beijing Warwick International Apartments was severely affected by SARS and turnover decreased by 22% compared with last interim period.

The majority of residential units of the Nob Hill development, our Company’s joint venture development project with Cheung Kong (Holdings) Limited, were sold.

The Group continues the pre-redevelopment work of the adjacent lands of the Nob Hill development.

The directors mentioned in our last year annual report that Old Sydney Town Theme Park, which owns and operates by the Company’s associate Bolan Holdings N.V., ceased its operation in early 2003 and the

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FAR EAST HOTELS AND ENTERTAINMENT LIMITED

Company had since then engaged professionals to explore the possibility of future usage of the piece of land where the Theme Park was situated.

As the effect of SARS has faded out and the CEPA (Closer Economic Partnership Arrangement) has been put into effect, the general economy is now recovering. In the circumstances, the directors will capture such opportunity and consider new business and investment opportunities which may provide the Group with better recurrent income.

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.

FINANCE ACTIVITIES

At the interim reporting date, the Group had bank loans and overdraft facilities amounting to HK$103,189,983 (31/03/2003: HK$159,456,314), of which HK$95,312,270 (31/03/2003: HK$152,456,314) were utilised. These facilities were secured by legal mortgages over the Group’s properties and deposits with an aggregate net book value of HK$74,389,162 (31/03/2003: HK$74,860,931) and HK$2,171,447 (31/03/2003: HK$2,161,807) respectively.

At 30 September 2003, the Group had no material exposure under foreign exchange contracts, interest or currency swaps or other financial derivatives.

Shareholders’ funds at 30/09/2003 amounted to approximately HK$542 million (31/03/2003: approximately HK$544 million). Accordingly, the Group’s gearing ratio (total bank loans and overdraft facilities utilised to shareholders’ funds) at 30/09/2003 is 18% (31/03/2003: 28%).

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

During the six months ended 30 September 2003, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed securities.

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 period ended 30 September 2003, 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.

On behalf of the Board Derek Chiu Managing Director & Chief Executive

Hong Kong, 19 December 2003

Please also refer to the published version of this announcement in The Standard dated on 22-12-2003.

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