Guoco Group Limited — Proxy Solicitation & Information Statement 2002

Nov 7, 2002

IMPORTANT

If you are in any doubt as to any aspect of this document or as to the action you should take, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold all your shares in FAR EAST HOTELS AND ENTERTAINMENT LIMITED , you should at once hand this document with the accompanying proxy form to the purchaser or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this document, 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 document.

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FAR EAST HOTELS AND ENTERTAINMENT LIMITED 遠東酒店實業有限公司

(Incorporated in Hong Kong under the Companies Ordinance)

CONNECTED TRANSACTION –

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

Financial Adviser

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Independent Financial Adviser to the Independent Board Committee

Taiwan Securities (HK) Co., Ltd.

A notice convening an extraordinary general meeting of Far East Hotels And Entertainment Limited to be held at the Penthouse, Far East Consortium Building, 121 Des Voeux Road Central, Hong Kong on Thursday, 28 November 2002 at 11:00 a.m. is set out in the Appendix B of this document. Whether or not you propose to attend the meeting, you are requested to complete the accompanying proxy form in accordance with the instructions printed thereon and return the same to the registered office of the Company at Suite 2806, 28th Floor, Great Eagle Centre, 23 Harbour Road, Wanchai, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding of the meeting.

6 November 2002

CONTENTS

	Page
Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Expected Timetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Letter of advice from Taiwan Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Valuation Report of the Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
Appendix A – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23
Appendix B – Notice of Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	27

DEFINITION

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

• “Agreement” the agreement dated 15 October 2002 relating to the Acquisition as entered into between the Vendor and the Purchasers

• “associates” the meaning ascribed under the Listing Rules

• “Beijing Warwick” Beijing Warwick Hot Spring Property Management Company Limited (北京華威溫泉物業管理有限公司), formerly known as Ye Jin Industrial Publisher Printing Company(冶金工業出版社 印刷廠 ; “Ye Jin”), which owns 5 percent equity interest in BJ Hai Lian

• “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 contract made between Ye Jin, Hai Heng and Tradeland in April 1995 (approved by Beijing Administrative and Management Bureau of Industrial and Commerce（北京市工商行政管理局）on 29 May 1995) and a supplementary agreement entered into betweenYe Jin, Hai Heng and Tradeland approved by Beijing Economic and Foreign Trade Committee（北京市對外經濟貿易委員會）on 18 July 1996

• “Board” the board of Directors “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

• “Group” the Company and its subsidiaries

• “Hai Heng” Hai Heng Industries Company（海恆實業總公司）, which holds 5% equity interest in BJ Hai Lian

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

– 1 –

DEFINITION

• “Hong Kong”

the Hong Kong Special Administrative Region of the PRC

• “Land”

• the piece of land situated at 北京市祟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

• “Latest Practicable Date” 5 November 2002, being the latest practicable date prior to the printing of this circular for ascertaining certain information referred to in this circular

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

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

• “Sale Shares” a total of 62,500 shares in Tradeland, representing 25 per cent of the total issued share capital of Tradeland

• “Shareholders”

the holders of the shares of the Company

• “Taiwan Securities”

• Taiwan Securities (HK) Company Limited, an independent financial adviser to the Independent Board Committee 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

• “Vigers” or “Independent Valuer” Vigers Hong Kong Limited, an independent professional surveyor and valuer

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EXPECTED TIMETABLE

Latest time for the shareholders to lodge forms of proxy for the

Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11:00 a.m. 26 November 2002

Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11:00 a.m. 28 November 2002 Announcement of the outcome of the

Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29 November 2002

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LETTER FROM THE BOARD

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FAR EAST HOTELS AND ENTERTAINMENT LIMITED 遠東酒店實業有限公司

(Incorporated in Hong Kong under the Companies Ordinance)

Executive Directors: Deacon Te-ken CHIU, J.P. (Chairman) Derek CHIU (Managing Director and Chief Executive) Desmond CHIU (Deputy Managing Director) Margaret CHIU

Registered Office: Suite 2806, 28th Floor Great Eagle Centre 23 Harbour Road Wanchai Hong Kong

Non-Executive Directors: Daniel Tat-jung CHIU (Vice Chairman) CHIU JU Ching-lan, J.P. Dick Tat-sang CHIU David Tat-cheong CHIU Dennis Tat-shing CHIU Duncan CHIU

Independent Non-executive Directors: Ho-fai MA Shing-hing IP

Alternate Directors: Janny Lin-chun LEUNG (Alternate Director to Deacon Te-ken CHIU) Sung-ki TANG (Alternate Director to Desmond CHIU)

6 November 2002

To Shareholders

Dear Sir or Madam,

INTRODUCTION

The Directors announced on 16 October 2002 that the Purchasers have entered into the conditional sales and purchase Agreement on 15 October 2002, pursuant to which the Purchasers agreed to purchase, and the Vendor agreed to sell, the Vendor’s 25 percent equity interest (being 62,500 shares) in Tradeland for a consideration of HK$37 million.

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LETTER FROM THE BOARD

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.

The purpose of this circular is to give you further information relating to the Acquisition.

An Independent Board Committee, comprising Mr. Ma Ho-fai, an independent non-executive director of the Company, 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. Another independent non-executive director of the Company, Mr. Ip Shing-hing, who serves as the Purchasers’ solicitor, is not considered independent in this transaction and is therefore not a member of the Independent Board Committee. Taiwan Securities has been appointed by the Company as the independent financial advisor to advise the Independent Board Committee in this respect.

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

THE AGREEMENT DATED 15 OCTOBER 2002

Parties

• Vendor : Mr. Li Fenglin, one of the directors of Tradeland, who owns 25% 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, represent 25% 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% by the Purchasers and as to 25% by the Vendor. Upon Completion, Tradeland will become an indirectly whollyowned subsidiary of the Company.

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LETTER FROM THE BOARD

Consideration

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 has been determined with reference to the consolidated net tangible asset value of Tradeland as at 31 March 2002 adjusted for the valuation of the Land and the cost of approximately HK$26 million required to pay for the land premium for the redevelopment of the Land. The property valuation is supported by a valuation report prepared by Vigers, 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. holding the money as stakeholders. The sum shall be released to the Vendor upon Completion, and the balance of HK$27 million shall be paid upon Completion accordingly.

Conditions of the Acquisition

The Acquisition is conditional on the fulfillment of the following:

1. Vigers, an independent professional property valuer, providing 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 by the Shareholders of the ordinary resolution to approve the Acquisition at the EGM to be convened by the Company;

It is noted that condition (1) and (2) have been satisfied as at the date of this circular. Completion of the Acquisition shall take place immediately upon passing the ordinary resolution to be proposed at 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% equity interest in BJ Hai Lian, which wholly owns Beijing Warwick International Apartments, which are two blocks of service apartments located on the Land 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. Beijing Warwick has the land use right for the Land. It has been agreed that the land use right will be transferred from Beijing Warwick 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

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LETTER FROM THE BOARD

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% equity interest in BJ Hai Lian was equally held by Beijing Warwick and Hai Heng. Each of Beijing Warwick 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 attract increasing direct investment from foreign corporations, the Directors are of the view that there is immense growth potential in Beijing’s residential market. Beijing’s successful bid for 2008 Olympic Games will further stimulate tourists’ interest in travelling to Beijing, which will spur demand for service apartments and hotel rooms in the city. In addition, the Directors consider there exists good redevelopment potential of the Land, which is situated closely to the South Second Ring Road, Beijing. BJ Hai Lian has obtained approval from Beijing Town Planning Committee on 20 August 2002 for redeveloping the Land into high rise residential apartments with total gross floor area of approximately 68,040 square metres. The Company’s intention is to redevelop the Land into service apartments and/or a hotel, which is in line with the existing business of BJ Hai Lian. The application for conversion will be pursued following the Completion of the Acquisition. 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.

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.

EXTRAORDINARY GENERAL MEETING

Set out in the Appendix B of the Circular is a notice convening the EGM to be held at the Penthouse, Far East Consortium Building, 121 Des Voeux Road Central, Hong Kong on Thursday, 28 November 2002 at 11:00 a.m. at which an ordinary resolution will be proposed to approve the Acquisition.

ACTION TO BE TAKEN

A proxy form for use at the EGM is enclosed herein. Whether or not you are able to attend the EGM in person, you are requested to complete the proxy form and return it to the registered office of the Company at Suite 2806, 28th Floor, Great Eagle Centre, 23 Harbour Road, Wanchai, Hong Kong not less

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LETTER FROM THE BOARD

than 48 hours before the time appointed for holding the EGM. Completion and return of a proxy form will not preclude shareholders from attending and voting at the EGM if they so wish.

RECOMMENDATION

An Independent Board Committee has been formed to consider and advise the Shareholders directly on the terms of the Acquisition. Having taken into account the advice of Taiwan Securities, the Independent Board Committee considers that the terms of the Acquisition are fair and reasonable so far as the Shareholders are concerned and advises the Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM. The letter of advice from Taiwan Securities is set out on pages 11 to 17 of this circular.

Yours faithfully, Derek Chiu Managing Director and Chief Executive

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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FAR EAST HOTELS AND ENTERTAINMENT LIMITED 遠東酒店實業有限公司

(Incorporated in Hong Kong under the Companies Ordinance)

6 November 2002

To the Shareholders

Dear Sir/Madam,

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

INTRODUCTION

I refer to the circular dated 6 November 2002 (the “Circular”) of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

As an independent non-executive director of the Company with no interest in the Acquisition, I have been appointed by the Board to establish the Independent Board Committee to advise you as a Shareholder of the Company whether in its view the terms of the Acquisition already entered into by the Company in respect thereof are in the interest of the Company and its Shareholders and are fair and reasonable so far as the Shareholders of the Company are concerned.

The terms of the Acquisition already entered into by the Company in respect thereof are summarised in the “Letter from the Board” set out on pages 4 to 8 of the Circular. In addition, the Independent Board Committee has been advised by Taiwan Securities in considering the terms of the Acquisition. You are strongly urged to read Taiwan Securities’ letter to the Independent Board Committee, which is set out on pages 11 to 17 of the Circular. As referred to in the “Letter from the Board” in the Circular, the Vendor and his associates do not have any equity interest in the Company. No Shareholders of the Company shall abstain from voting at the EGM to approve the Acquisition.

RECOMMENDATION

As the sole member of the Independent Board Committee, I have discussed with the management of the Company the reasons for the Acquisition. I have also discussed with Taiwan Securities the basis upon which its advice has been given to us.

– 9 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Taking into account the recommendation of Taiwan Securities, I am of the opinion that the Acquisition is in the interests of the Company and its Shareholders, and the terms of the Acquisition already entered into by the Company in respect thereof as described in the “Letter from the Board” in the Circular are fair and reasonable so far as the Shareholders of the Company are concerned. I accordingly recommend the Shareholders of the Company to vote in favour of the ordinary resolution set out in the EGM Notice to approve the Acquisition.

Yours faithfully, The Independent Board Committee Ma Ho Fai Independent non-executive Director

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LETTER OF ADVICE FROM TAIWAN SECURITIES

The following is the text of the letter of advice to the Independent Board Committee from Taiwan Securities regarding the Acquisition for the purpose of incorporation in the Circular.

Taiwan Securities (HK) Co., Ltd.

Taiwan Securities (HK) Company Limited

Suite 4001-03, 40/F Tower Two, Lippo Centre 89 Queensway Central, Hong Kong

6 November 2002

The Independent Board Committee Far East Hotels & Entertainment Limited Suite 2806, 28/F., Great Eagle Centre 23 Harbour Road Wanchai Hong Kong

Dear Sirs,

CONNECTED TRANSACTION

INTRODUCTION

We have been appointed as the independent financial adviser to the Independent Board Committee in relation to the Acquisition, details of which are contained in the “Letter from the Board” set out on pages 4 to 8 of a circular to the shareholders of the Company dated 6 November 2002 (the “Circular”), of which this letter forms part. Capitalized terms used in this letter shall have the same meanings as defined in the Circular unless the context otherwise requires.

Pursuant to the Listing Rules, the Agreement between the Purchasers, wholly owned subsidiaries of the Company, and the Vendor constitutes a connected transaction of the Company in view of the fact that the Vendor is a director and a substantial shareholder of Tradeland which is a 75% indirectly owned subsidiary of the Company. Accordingly, the approval by the Shareholders will be sought by the Company at the EGM to approve the Acquisition.

In arriving at our opinion, we have relied on the statements, information, opinions, reports and representations contained in the Circular and the information and representations provided to us by the Directors and other professionals. We have assumed that all such statements, information, opinions, valuation, reports and representations contained or referred to in the Circular or otherwise provided by the Directors for which they are solely and wholly responsible were true, complete and accurate at the time they were made and given and continue to be so at the date of despatch of the Circular. We have also assumed that all statements of belief, opinion and intention made by the Directors in the Circular were reasonably made after due and careful enquiry.

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LETTER OF ADVICE FROM TAIWAN SECURITIES

We consider that we have been provided with sufficient information on which to form a reasonable basis for our recommendation. We have also been advised by the Directors that no material facts have been omitted from the Circular, the omission of which would make the Circular misleading. We have no reason to suspect that any relevant information or reports have been withheld, nor are we aware of any facts or circumstances which would render the information provided and the representations made to us to be untrue, inaccurate, or misleading. We have not, however, carried out any independent verification of the information provided by the Directors, nor have we conducted any independent investigation into the businesses, affairs, current states or likely prospects of the Company, the Purchasers, the Vendor, Tradeland, BJ Hai Lian or any of their respective investments, subsidiaries, associates, business affiliates, licences and approvals; the legal, specific industrial and technical aspects relating to the valuation report on the Property; and the legal title, the land use right, the commercial and redevelopment aspects of the Property and the Land.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our advice in respect of the Acquisition, we have considered the following principal factors and reasons:

(A) Background

Details of the background information of the Acquisition are set out in the “Letter from the Board” contained in the Circular. As mentioned therein, the Company has agreed to purchase from the Vendor of 25% equity interest in Tradeland for a total cash consideration of HK$37 million. Tradeland is principally engaged in the investment holding of 90% equity interest in BJ Hai Lian which wholly owns Beijing Warwick International Apartments (the “Property”). The Sale Shares represent the entire interest of the Vendor in Tradeland. Upon Completion, Tradeland will become an indirectly wholly-owned subsidiary of the Company.

(B) Business of the Company and its subsidiaries (the “Group”)

The principal activities of the Group are hotel operation, property rental, securities trading, loan financing and investment holding. The transaction contemplated under the Agreement relates to acquisition of property interests by the Group. Taking into account the existing business of the Group, the Acquisition is, in our view, in line with the business nature of the Group and is the ordinary course of business of the Group.

(C) Information on the Property

BJ Hai Lian wholly owns the Property 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 Land where the Property is 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. Currently, Beijing Warwick, formerly known as Ye Jin, which owns 5% equity interest in BJ Hai Lian, has the land use right for the Land. We understand from the Board that it has been agreed that the land use right will be transferred from Beijing Warwick to BJ Hai Lian.

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LETTER OF ADVICE FROM TAIWAN SECURITIES

The Board has confirmed to us that the land use right of the Land is currently held by Beijing Warwick, which is formerly known as Ye Jin. Beijing Warwick is actually the former Ye Jin.

As stated in the independent property valuation report dated 6 November 2002 prepared by Vigers (the “Valuation Report”), being an independent professional valuer, the Property is proposed to be redeveloped into two blocks of high rise residential apartments with a total floor area of about 68,040 square metres including basement area of about 16,043 square metres. The existing buildings erected on the Land have not yet been demolished, however, the redevelopment proposal has been approved by Beijing Town Planning Committee (北京市規劃委員會 ) on 20 August 2002. As advised by the Board, the redevelopment of the Property is expected to commence in the first half of 2003 and is expected to be completed in 2 years. As such, we concur with the view of the Board that the Group can benefit from Beijing’s successful bid for 2008 Olympic Games which will further stimulate tourists’ interest in traveling to Beijing, which will spur demand for service apartments and hotel rooms in the city.

(D) Terms of the Acquisition

Basis and amount of consideration

Under the Agreement, the Group will purchase from the Vendor 25% equity interest in Tradeland for a total Consideration of HK$37 million. 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. As stated in the “Letter from the Board”, the Consideration has been arrived at after arm’s length negotiations between the parties to the Agreement with regard to the prospects and the redevelopment potential of the Land.

Valuation of Property

As indicated in the Valuation Report, the Independent Valuer has valued the Property by direct comparison approach by making reference to comparable transactions in the locality. We have discussed with the Independent Valuer in connection with the assumptions and the adoption of this approach. The Independent Valuer has made reference to similar transactions in the market and has taken into account the future floor areas and required construction cost. Furthermore, the Independent Valuer has confirmed to us that such approach has been a fair and reasonable basis to value similar property. In this regard, we concur with the view of the Independent Valuer.

According to the Valuation Report, the total capital value of the Property in existing state reflecting redevelopment potential as residential apartments as at 30 September 2002 was RMB270 million (or approximately HK$254.72 million). The unadjusted consolidated net deficit of Tradeland as at 31 March 2002 was approximately HK$16.6 million. After adjusted for the valuation of the Property reflecting redevelopment potential and the cost required to pay for the land premium of HK$26 million for the redevelopment of the Property, the adjusted net asset value of Tradeland was approximately HK$152.78 million. Therefore, 25% attributable interest amounted to approximately HK$38.2 million. The Consideration is at a 3.1% discount to the adjusted attributable interest of HK$38.2 million. The Consideration has been determined with reference to the net asset value of Tradeland as at 31 March 2002 as adjusted for the aforesaid.

– 13 –

LETTER OF ADVICE FROM TAIWAN SECURITIES

As advised by the Board, the land use right of the Land is currently held by Beijing Warwick, which is the former Ye Jin. The Board has been confirmed to us that the land use right will be transferred from Beijing Warwick to BJ Hai Lian but the Consideration and the time for the transfer have not been determined.

Given Tradeland is basically an investment holding company and the sole asset of which is the 90% equity interest in BJ Hai Lian which in turn wholly owns the Property, it is reasonable for the Board to determine the Consideration payable by the Group with reference to the adjusted net asset value of Tradeland as aforesaid after taking into account the independent valuation of the Property. For the reasons mentioned above, we consider that the terms of the Acquisition are fair and reasonable so far as the Shareholders are concerned.

(E) Source of fund of the Consideration

As stated in the “Letter from the Board”, the Consideration will be fully satisfied in cash. The Consideration will be financed by internal resources of the Group. In this regard, your attention is drawn to the discussion on “Net assets and gearing” and “Working Capital” under the paragraph headed “Financial Impacts of the Acquisition on the Group” below.

(F) Reasons for and benefits resulting from the Acquisition

As mentioned in the “Letter from the Board”, Tradeland owns 90% equity interest in BJ Hai Lian which wholly owns the Property. The Board is of the view that given the principal activities of the Group which include hotel operation and property rental, the Acquisition is in line with the business strategy of the Group. Furthermore, The Acquisition would enable the Group to gain a full and complete control in Tradeland, which will result in greater flexibility and control on the redevelopment of the Property. As confirmed by the Board, the terms of the Agreement were negotiated on an arm’s length basis between the Purchasers and the Vendor. The Board considers 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.

Given China’s accession to the World Trade Organization which will spur direct investment from foreign corporations, the Board is of the view that there is immense growth potential in Beijing residential markets. The Board believes that Beijing’s successful bid for 2008 Olympic Games will further stimulate tourists’ interest in traveling to Beijing, which will spur demand for service apartments and hotel rooms in the city. In addition, the Board considers the good redevelopment potential of the Land, which is situated close to the South Second Ring Road, Beijing. We understand from the Board that the Group is in a good position to capture the accrued benefits of the redevelopment of the Property. The Independent Valuer in preparing the Valuation Report of the property’s redevelopment value has taken into consideration of the prevailing property market condition in Beijing with reference to recent comparable transactions in the locality.

Having considered the aforesaid benefits to be accrued to the Group, we consider that the entering into the Agreement by the Group is justified in the aspect of broadening of the asset base of the Group and would enable the Group to further consolidate its interests to have greater flexibility and control on the redevelopment of the Property.

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LETTER OF ADVICE FROM TAIWAN SECURITIES

In addition, we are of the view that since the Group has already owned 75% interest in Tradeland, the entering into the Agreement by the Company will not change its asset profile significantly.

(G) Financial Impacts of the Acquisition on the Group

(i) Net assets and gearing

Based on the audited consolidated net assets (after minority interests) of the Group as at 31 March 2002 of HK$583.6 million, the Consideration represents 6.34% of the net assets of the Group. Upon Completion and assuming that the Company’s additional investment in Tradeland will be stated at cost while the Consideration will be concluded on a dollar for dollar basis, the Acquisition will have no material impact on the net assets of the Group.

We understand from the Board that a goodwill of approximately HK$37 million will be arisen upon Completion. Such goodwill will be amortized for a period of 22 years. The net tangible assets of the Group will be decreased by approximately HK$37 million upon Completion. Given the value of net tangible assets of the Group as of 31 March 2002 is HK$583.6 million, we concur with the view of the Board that the effect on the net tangible assets of the Group is insignificant.

We have noted that the Consideration is to be financed by the Group’s internal resources. The bank balances and cash of the Group amounted to HK$121.5 miliion as at 31 March 2002. With regard to the gearing ratio of the Group, we have conducted an analysis as below:

		Proforma	Proforma
		(assuming	(assuming
		100% financed	100% financed
		by internal	by additional
	As at 31 March 2002	cash resources)	banking facilities)
	HK$	HK$	HK$
Total liabilities – (a)	254,411,203	254,411,203	291,411,203
Net assets (after minority
interests) – (b)	583,553,364	583,553,364	583,553,364
Gearing ratio – (a)/(b)	43.6%	43.6%	49.9%

The audited gearing ratio was approximately 43.6% as at 31 March 2002. If the Consideration is to be 100% financed by the Group’s internal cash resources, it will have no impact on the proforma gearing ratio. If the Consideration is to be 100% financed by the Group’s additional banking facilities, which the Board confirms that the unutilized banking facilities available to the Group amount to approximately HK$70 million, the proforma gearing ratio of the Group will increase to 49.9%. The funding of the Consideration is likely to have a slight negative impact on the gearing of the Group and increase the interest expense of the Group. The Board has confirmed that the cash balances of the Group as stated in the latest annual report of the Group amounted to approximately HK$121.5 million (as of 31 March 2002) and the unutilized banking facilities available to the Group amounted to approximately HK$70 million, we concur with the view of the Board that the Group will have sufficient financial resources to fund the Consideration even

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LETTER OF ADVICE FROM TAIWAN SECURITIES

though it is likely to have a slight negative impact on the gearing of the Group. Based on the aforesaid, we are of the opinion that the increase in gearing will not have an adverse impact on the Group.

(ii) Profit and loss

The Group reported audited net loss of HK$25,344,197 and HK$18,340,844 for the years ended 31 March 2002 and 31 March 2001 respectively. In view of the fact that the Property is yet to be redeveloped as stated in the “Letter from the Board”, we consider that the Acquisition has no material impact on the earnings for the Group, save as the resulting amortization expense of HK$1.68 million per annum over a period of 22 years.

The Group owns 75% equity interest in Tradeland which in turn holds 90% equity interest in BJ Hai Lian. Given the fact that Tradeland has been operating in loss for the past two financial years on consolidation basis, hence the further acquisition of 25% equity interest in Tradeland is likely to increase the loss contributable to the Group. Given the fact that Tradeland is already a 75% indirectly owned subsidiary of the Company, the Board believes that the impact would not be significant and the Acquisition will have positive contribution to the Group’s earnings after taking account of the redevelopment potential of the Land.

(iii) Working capital

The Consideration amounts to HK$37 million which will be fully funded by internal resources of the Group. As referred to in the paragraph headed “Source of funding of the Consideration” above, the Consideration will be satisfied by the Group entirely in cash. We have been advised by the Board that the funding of the Consideration will have no material impact on the Group’s existing banking facilities as it is the normal practice of the Group to take on additional banking facility on a project by project basis subject to the credit limits to be granted by the banks. Based on the bank balances and cash position of the Group as stated in the latest annual report of the Group amounted to HK$121.5 million as at 31 March 2002 and assuming that there will be no material reduction in banking facilities now available to the Group, we concur with the view of the Board that the Group will have sufficient financial resources to fund the Consideration. Nonetheless, the funding of the Consideration will have a potential negative impact on the gearing of the Group and will increase the relevant interest expenses. We are of the opinion that the working capital requirement of the Group will not be adversely affected by the Acquisition based on there is no material change of the financial structure of the Group.

The Board has indicated that the future redevelopment cost of the Property is approximately RMB150 million. It is the Group’s normal practice to take on additional banking facilities on a project by project basis. The Board has confirmed to us that the redevelopment cost will be funded by additional banking facilities and internal cash resources. Furthermore, given that the cash balances of the Group as stated in the latest annual report of the Group amounted to approximately HK$121.5 million, the Board believes that the final funding arrangement will have no material impact to the Group’s working capital. As the Board believes that additional appropriate banking facilities is in place and no material changes in the Group’s cash position, we concur with the view of the Board that the redevelopment cost will have no material impact to the Group’s working capital.

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LETTER OF ADVICE FROM TAIWAN SECURITIES

RECOMMENDATION

Having taken into account the principal factors and reasons referred to above, and having regard to the independent professional valuation by the Independent Valuer, we consider that the Acquisition is in the interest of the Company and the terms of the Acquisition are fair and reasonable so far as the interests of the Shareholders as a whole are concerned. Accordingly, we advise the Independent Board Committee to recommend the Shareholders to vote in favor of the ordinary resolution in relation to the Acquisition and the implementation thereof at the EGM.

Yours faithfully, For and on behalf of

Taiwan Securities (HK) Company Limited Ronald T.L. Wan

Executive Director & Head of Corporate Finance

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VALUATION REPORT OF THE PROPERTY

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Vigers Hong Kong Limited 16/F, Miramar Tower 132 Nathan Road Tsimshatsui Kowloon

6 November 2002

The Directors

Far East Hotels and Entertainment Limited

Suite 2806, 28th Floor Great Eagle Centre 23 Harbour Road Wanchai Hong Kong

Dear Sirs,

Re: Warwick International Apartments, No. 7A Nam Shui Guan, Guang Qu Men, Chong Wen District, Beijing, the PRC.

In accordance with your instructions for us to value the above property interests to be held by Far East Hotels and Entertainment Limited (the “Company”) and its subsidiaries (together referred to as the “Group”) in the People’s Republic of China (“the PRC”), we confirm that we have carried out an inspection, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the open market value of such property interests as at 30 September 2002.

Our valuation is our opinion of the open market value which we would define as intended to mean – “the best price at which the sale of an interest in property might reasonably be expected to have been completed unconditionally for cash consideration on the date of valuation assuming:

• (a) a willing seller;

• (b) that, prior to the date of valuation, there had been a reasonable period (having regard to the nature of the property and the state of the market) for the proper marketing of the interest, for the agreement of price and terms and for the completion of the sale;

• (c) that the state of the market, level of values and other circumstances were, on any earlier assumed date of exchange of contracts, the same as on the date of valuation;

• (d) that no account is taken of any additional bid by a special purchaser with a special interest; and

• (e) that both parties to the transaction had acted knowledgeably, prudently and without compulsion.”

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VALUATION REPORT OF THE PROPERTY

Our valuation has been made on the assumption that the owner sells the property interests on the open market in its existing state without the benefit of a deferred terms contract, leaseback, joint venture, management agreement or any similar arrangement which would serve to increase the value of the property interests.

We have valued the property on the basis that the property will be developed and completed in accordance with the Group’s latest development proposal provided to us. We have assumed that approvals for the proposal has been obtained. In arriving at our opinion of the value, we have valued it by Direct Comparison Approach by making reference to comparable transactions in the locality and have also taken into account the construction costs that will be expended to complete the development to reflect the quality of the completed development. In forming our opinion of value of the property, we have also valued it by Direct Comparison Approach by making reference to the comparable site transactions and land prices as available in the relevant market.

We have not provided with extracts from title documents relating to such property interest. We have not, however, searched the original documents to verify ownership or to verify existence of any lease amendment which do not appear on the copies handed to us. All documents and leases have been used for reference only. All dimensions measurements and areas are approximations.

In undertaking our valuation of the property, we have relied on the legal opinion provided by the Group’s PRC legal adviser (“the PRC Legal Opinion”) regarding the title to the Group’s proposed interest in the property.

We have inspected the exterior and, where possible, the interior of the property. However, we have not carried out a structural survey nor have we inspected woodwork or other parts of the structures which are covered, unexposed or inaccessible and we are therefore unable to report that any such parts of the property interests are free from defect.

We are relied to a considerable extent on information provided by you and have accepted advise given to us by you on such matters as planning approvals or statutory notices, easements, tenure, occupation, lettings, site and floor areas and in the identification of those property interests in which the Group has a valid interest.

No allowance has been made in our valuation for any charges, mortgages or amounts owing on the property nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the property interest is free from encumbrances restrictions and outgoings of an onerous nature which could affect its value.

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VALUATION REPORT OF THE PROPERTY

Unless otherwise stated, all money amounts stated are in renminbi. The exchange rate used in valuing the property interests in the PRC as at 30 September 2002 was HK$1=RMB1.06. There has been no significant fluctuation in exchange rate between that date and the date of this letter.

We enclose herewith the valuation certificate.

Yours faithfully, For and on behalf of

VIGERS HONG KONG LTD. Raymond Ho Kai Kwong Registered Professional Surveyor

MRICS, AHKIS Director

Note: Raymond K.K. Ho, Chartered Surveyor, MRICS, AHKIS has extensive experience in undertaking valuations of properties in Hong Kong and Macau and has over nine years’ experience in the valuation of properties in the PRC.

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281002 Far East Hotel (CT-CC) JO: 5835(C) 3P*041102

VALUATION REPORT OF THE PROPERTY

1. Cover

VALUATION CERTIFICATE

Description and Tenure

Property

Warwick International The property comprises a site with Apartments, No. A7 a total area of approximately Nam Shui Guan, Guang 13,900 square metres. Two blocks Qu Men, Chong Wen of converted apartments are built District, Beijing, the along the northern and eastern side PRC of the site. The property is proposed to be redeveloped into two blocks of high rise residential apartments with a total floor area of about 68,040 square metres (732,382 square feet) including basement area of about 16,043 square metres (172,687 square feet). Portion of the basement area is designated as carpark area for accommodating 280 car parking spaces.

Capital value in existing state reflecting redevelopment potential as residential apartment as at Particulars of occupancy 30 September 2002 Two service apartment RMB270,000,000 blocks and their ancillary facilities are currently erected on the subject site.

Particulars of occupancy

In the course of valuation, the property is valued on basis reflecting redevelopment potential as residential apartment and with the benefit of vacant possession.

As at the date of valuation, the existing buildings erected on the lot have not yet been demolished, h o w e v e r, t h e r e d e v e l o p m e n t proposal has been approved by the Beijing Town Planning Committee on 20 August 2002.

With reference to the joint-venture agreement signed between Ye Jin, Hai Heng and Tradeland in April 1995, Tradeland owns 90% of the joint venture company – BJ Hai Lian which has a right to occupy and carry on business in leasing, r e a l e s t a t e , m a n a g e m e n t , entertainment and snacks in the subject property for a term of 30 years commencing from 29 May 1995 to 28 May 2025.

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VALUATION REPORT OF THE PROPERTY

Notes:

1. The PRC legal opinion states that:

2. (i) BJ Hai Lian, Beijing Warwick and Beijing Oriental City Industries Company Limited (北京東方誠成實業有限 公司 , an agent who handled all the application matters for the redevelopment project), through a property development company Beijing Yong Hui Jia Hong Property Development Company Limited (北京永匯嘉弘房地 產開發有限公司 ), submitted an application for Warwick Hot Spring Residential Apartments (華威溫泉住宅樓 ) project to Beijing Town Planning Committee (北京市規劃委員會 ) and Beijing Construction Committee (北京市 建設委員會 ) and received approval accordingly.

3. (ii) To ensure that BJ Hai Lian has the right to redevelop the Land, it has been agreed that (a) Beijing Yong Hui Jia Hong Property Development Company Limited will transfer the right to redevelop the Land to a property development company appointed by BJ Hai Lian; or (b) Beijing Yong Hui Jia Hong Property Development Company Limited will be sold to BJ Hai Lian.

4. (iii) BJ Hai Lian has obtained consent from the user of the land, Beijing Warwick and has the right to develop the subject site.

5. (iv) According to Notice of Assessment and Review on Design Plan (Residential Construction) (Review No. 0734 2002) (審定設計方案通知書》（居住建築）(2002規審字0734號）and its attached plan issued to Beijing Warwick, Beijing Yong Hui Jia Hong Property Development Company Limited by Beijing Town Planning Committee, the site area of the subject development is 13,900 square meters, the planning gross floor area is 68,040 square meters (in which gross floor area of phase 1 of the proposed development is 57,344 square meters).

6. The Company states that:

7. (i) there is no relationship between Beijing Warwick and Beijing Yong Hui Jia Hong Property Development Company Limited, other than that Beijing Yong Hui Jia Hong Property Development Company Limited holds a license for land redevelopment in Beijing, and the application for Warwick Hot Spring Residential Apartment project was made in the name of Beijing Yong Hui Jia Hong Property Development Company Limited; and

8. (ii) the transfer of the redevelopment right from Beijing Yong Hui Jia Hong Property Development Company Limited to BJ Hai Lian will be made following the Completion of the Acquisition.

9. In the course of our valuation, we have made the following assumptions:

10. (i) The redevelopment proposed with a total gross floor area of 68,040 square metres including basement area of about 16,043 square metres as approved by the Beijing Town Planning Committee and the relevant government authorities and construction works can be commenced shortly.

11. (ii) The redevelopment proposal is based on the document and plan approved by the Beijing Town Planning Committee (Notice of Assessment and Review on Design Plan (Residential Construction) (Review No. 0734 2002)) as provided by the Company.

12. (iii) According to the information obtained from the plan, the redevelopment scheme will comprise 2 phases as follows:

Total Site Area		Total Floor Area
13,900 square metres		68,040 square metres
Phase 1 Site Area	Plot Ratio	Floor Area
9,500 square metres	4.35	57,344 square metres

• (iv) Consent is obtained from Beijing Warwick and Beijing Yong Hui Jia Hong Property Development Company Limited for BJ Hai Lian to carry out the proposed development.

• (v) all consents, approvals and licences from relevant government authorities for development of the property will be granted without any onerous conditions or undue delay and the proposed development of the property will be in compliance with the relevant planning regulations.

• (vi) the property can be freely transferred in the open market with the land use right term of 70 years from the date of valuation for residential use at no extra land premium or other onerous payment payable to the government.

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GENERAL INFORMATION

APPENDIX A

RESPONSBILITY STATEMENT

This circular includes particulars given in compliance with Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief there are no other facts, the omission of which would make any statement herein misleading.

DISCLOSURE OF INTERESTS

• (a) As at the Latest Practicable Date, the interests of the Directors and their associates in the share capital of the Company as recorded in the register maintained by the Company pursuant to Section 29 of the Securities (Disclosure of Interests) Ordinance (“SDI Ordinance”) were as follows:

Name of director	Personal interests	Family interests	Corporate interests
Mr. Deacon Te-ken Chiu	12,491,424	–	111,901,0521
Mr. Derek Chiu	11,394,000	–	108,430,2992
Madam Chiu Ju Ching-Ian	188,000	–	–
Mr. Dick Tat-sang Chiu	12,172,800	–	22,277,0333
Mr. David Tat-cheong Chiu	3,144,627	–	–
Ms. Margaret Chiu	676,240	–	5,000,0004

• 1 Of the 111,901,052 shares, 100,939,842 shares were held by various private companies controlled by Mr. Deacon Te-ken Chiu, 295,210 shares were held by Far East Consortium Limited, a wholly-owned subsidiary of Far East Consortium International Limited, and 10,666,000 shares were held by Brentford Investment Inc., a whollyowned subsidiary of Far East Technology International Limited. Mr. Deacon Te-ken Chiu is a controlling shareholder of these companies.

• 2 The 108,430,299 shares were held by Energy Overseas Ltd, a company controlled by Mr. Derek Chiu.

• 3 The 22,277,033 shares were held by various private companies controlled by Mr. Dick Tat-sang Chiu.

• 4 The 5,000,000 shares were held by a private company controlled by Ms. Margaret Chiu.

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GENERAL INFORMATION

APPENDIX A

• (b) As at the Latest Practicable Date, the following Directors hold share options to subscribe for shares of the Company:

		Number of	Exercise
Name of Director	options	outstanding	price	Exercisable period
			(HK$)
Mr. Derek Chiu		590,000	1.44	October 1995 – September 2005
		1,000,000	3.01	September 1997 – August 2007
Mr. Deacon Te-ken	Chiu	5,000,000	1.42	November 1995 – October 2005
Madam Chiu Ju Ching-Ian		4,000,000	1.60	April 1996 – March 2006
Mr. Sung-ki Tang		150,000	1.60	April 1996 – March 2006
		6,000,000	1.00	January 2000 – December 2009
Ms. Margaret Chiu		7,000,000	1.74	November 1997 – October 2007

• (c) Other than those disclosed in (a) and (b) above, as at the Latest Practicable Date, none of the Directors had any interest in the securities of the Company or any associated corporation (within the meaning of the SDI Ordinance) which (i) would be required to be notified to the Company and the Stock Exchange pursuant to Section 28 of the SDI Ordinance (including interests which a Director would be taken or deemed to have under Section 31, or Part I of the schedule to, the SDI Ordinance); or (ii) would be required to be entered into the register kept by the Company pursuant to Section 29 of SDI Ordinance; or (iii) would be required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by directors of Listed Companies.

• (d) As at the Latest Practicable Date, none of the Directors was materially interested in any contracts or arrangements which were subsisting at the Latest Practicable Date and were significant in relation to the business of the Group.

• (e) As at the Latest Practicable Date, Taiwan Securities and Vigers have no shareholding in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

• (f) As at the Latest Practicable Date, none of the Directors and Taiwan Securities and Vigers, directly or indirectly have any assets which have been, since 31 March 2002 (the date to which the latest published audited accounts of the Company were made up), acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

– 24 –

GENERAL INFORMATION

APPENDIX A

SUBSTANTIAL SHAREHOLDERS

Other than the Directors or chief executive of the Company whose interests are disclosed in the section headed “Disclosure of Interests” above, the register of substantial shareholders maintained by the Company pursuant to Section 16(1) of the SDI Ordinance discloses no person as having a direct or indirect interest of 10% or more in the issued share capital of the Company as at the Latest Practicable Date.

SERVICE CONTRACTS

None of the Directors has a service contract with the Company not determinable by the employing company within one year without payment of compensation, other than statutory compensation.

QUALIFICATIONS AND CONSENTS

Taiwan Securities and Vigers have given and have not withdrawn their written consents to the issue of this circular with the inclusion of and references to their names and their letters, in the form and context in which they respectively appear. Taiwan Securities is a registered investment adviser and registered dealer and Vigers is a professional surveyor and valuer.

LITIGATION

Neither the Company nor any of its subsidiaries are engaged in any litigation or claim of material importance and, so far as the Directors are aware, no litigation or claim of material importance is pending or threatened against the Company or any of its subsidiaries.

NO MATERIAL CHANGE

The Directors are not aware of any material adverse change in the financial or trading positions of the Company since 31 March 2002 (being the date to which the latest published audited consolidated financial statements of the Company were made up).

MISCELLANEOUS

• (a) The English text of this circular shall prevail over the Chinese text.

• (b) The secretary of the Company is Mr. Sung-ki Tang, AHKSA, FCCA

• (c) The registered office of the Company is at Suite 2806, 28th Floor, Great Eagle Centre, 23 Harbour Road, Wanchai, Hong Kong. The share registrar and transfer office of the Company is Standard Registrars Limited at 5th Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong.

– 25 –

GENERAL INFORMATION

APPENDIX A

DOCUMENTS FOR INSPECTION

Copies of the following documents will be available for inspection at the office of the Company at Suite 2806, 28th Floor, Great Eagle Centre, 23 Harbour Road, Wanchai, Hong Kong during the normal office hours until the date of the EGM, which is 28 November 2002:

• (a) the letter from the Independent Board Committee, the full and exact text of which is set out on pages 9 to 10 of this circular;

• (b) the letter from Taiwan Securities, the full and exact text of which is set out on pages 11 to 17 of this circular;

• (c) the valuation report from Vigers, the full and exact of which is set out on pages 18 to 22 of this circular;

• (d) the written consents referred to in the section headed “Qualifications and Consents” above; and

• (e) the Agreement.

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NOTICE OF EXTRAORDINARY GENERAL MEETING

APPENDIX B

==> picture [55 x 56] intentionally omitted <==

FAR EAST HOTELS AND ENTERTAINMENT LIMITED 遠東酒店實業有限公司

(Incorporated in Hong Kong under the Companies Ordinance)

NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of the Company will be held at the Penthouse, Far East Consortium Building, 121 Des Voeux Road Central, Hong Kong on Thursday, 28 November 2002 at 11:00 a.m. for the purpose of considering and, if thought fit, passing the following resolution which will be proposed as an Ordinary Resolution of the Company:

ORDINARY RESOLUTION

“ THAT

the Purchasers, including Oneyon Limited and Garmelo Secretarial Limited, which are an indirectly wholly-owned subsidiary and a directly wholly-owned subsidiary of the Company respectively, acquire 25% equity interest in Tradeland Investments Limited from the Vendor at a consideration of HK$37 million, which will be funded by internal resources. Upon completion of the Acquisition, Tradeland Investments Limited will become an indirectly wholly-owned subsidiary of the Company.”

By order of the Board Sung-ki TANG Secretary

Hong Kong, 6 November 2002

Notes:

1. Any member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and, on a poll, vote instead of him. A proxy need not be a member of the Company.

1. To be valid, a form of proxy, together with any power of attorney or other authority (if any) under which it is signed, or a notarially certified copy thereof, must be lodged with the registered office of the Company at Suite 2806, 28th Floor, Great Eagle Centre, 23 Harbour Road, Wanchai, Hong Kong not less than 48 hours before the time appointed for holding the meeting.

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