Hang Lung Group Limited — Earnings Release 2004

Dec 17, 2004

OVERSEAS REGULATORY ANNOUNCEMENT

(This overseas regulatory announcement was issued pursuant to the Rule 13.09(2) of the Rules governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.)

The information below is the English translation of an announcement released by PCCW Limited’s subsidiary namely JALECO LTD., which is incorporated under the laws of Japan with shares registered on the Over the Counter market in Japan, to Jasdaq Securities Exchange Inc. (“JASDAQ”) on December 17, 2004.

December 17, 2004

JALECO LTD.
(JASDAQ/Code 7954)
Representative Director, President Peter Anthony Allen
Contact: Chief Financial Officer, Keiko Toyoshima
TEL: 03-6230-2100

JALECO LTD.

(the “Company”)

Announcement of Revision of Earnings Forecast

The Company hereby announces revisions to our earnings forecast for the twelve months period ended December 31, 2004, which we previously announced at the time of our earnings announcement on August 27, 2004, as follows:

1. Revision to consolidated earnings forecast (12 months period ended December 31, 2004)

（Million yen）

	Revenue	Ordinary profit/(loss)	Net profit/(loss)
Previously projected (A)	1,923	(1,791)	(1,767)
Revised forecast (B)	1,250	(1,791)	(1,767)
Variance (B-A)	(673)	0	0
Percentage (%)	-35.00%	―	―

1. Revision to company’s non-consolidated earnings forecast (12 months period ended December 31, 2004)

（Million yen）

	Revenue	Ordinary profit/(loss)	Net profit/(loss)
Previously projected (A)	529	(617)	(1,784)
Revised forecast (B)	230	(617)	(1,784)
Change (B-A)	(299)	0	0
Change (%)	-56.52%	―	―

1. Reasons for revision

Consolidated Forecast:

Revenue will be Yen1,250 million, Yen 673 million less than the previous projection. The shortfall is primarily due to the following two reasons.

First, the Company originally planned to release 3 PS2 game titles for the Japan market in this fiscal year, but has decided to give up the release of "Wallace & Gromit" (PS2) for the time being due to several reasons, and to reschedule the release of 2 titles, self-publishing title: "World Super Police," and a co-publishing title with SPIKE Co., Ltd.: "SIN DECOTORA DENSETSU" to next fiscal year because of the delay in development and also in order to avoid competition.

Second, development of GameCube versions of "Room Zoom" and "World Championship Pool 2004" for European markets, which the Company originally planned to release in this fiscal year, took longer than expected, and thus the release of the 2 game SKUs is rescheduled to next fiscal year.

Company’s Non-consolidated Forecast:

Revenue will be Yen 230 million, Yen 299 million less than the previous projection. As mentioned above, the Company originally planned to release 3 PS2 game titles for the Japan market in this fiscal year, but has decided to for the time being give up the release of 1 title and reschedule the release of 2 titles into next fiscal year.

Risk Factors which may affect the forecast.

1. The Company aims to be a global game publisher and holds most of its cash in foreign currencies, and therefore is subject to foreign exchange risk.
2. The Company might take risks of returned goods based on the market practices in various markets it operates and certain special circumstances.
3. Since the Company carries on business worldwide, the Company may be affected by unexpected disaster and environmental change.
4. Actual results for the prior-year period from January 1, 2003 to December 31, 2003 are set out below for reference.

Consolidated Results 　 (Million yen)

	Revenue	Ordinary profit/(loss)	Net profit/(loss)
FY 2003 Actual (January 1 to December 31, 2003) FY2004 Forecasted (January 1 to December 31, 2004)	1,499 1,250	(4,833) (1,791)	(7,508) (1,767)

Company’s Non-consolidated Results （Million yen）

	Revenue	Ordinary profit/(loss)	Net profit/(loss)
FY 2003 Actual (January 1 to December 31, 2003) FY2004 Forecasted (January 1 to December 31, 2004)	197 230	(2,590) (617)	(13,803) (1,784)

Note: This announcement contains forward-looking statements that involve risk and uncertainties. These forward-looking statements are not historical facts, but rather are based on the current projections and estimates of the Company. The Company cautions you that a number of important factors could cause actual results to differ materially from those discussed in forward-looking statements.