International Genius Company - Proxy Solicitation & Information Statement 2003

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your Asean Resources shares, you should at once hand this circular and the accompanying form of proxy to the purchaser or the transferee, or to the bank, stockbroker or other agent through whom the sale or the transfer was effected for transmission to the purchaser or the transferee.

The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

ASEAN RESOURCES HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

BESTEAM LIMITED

(Incorporated in the British Virgin Islands with limited liability)

GROUP REORGANISATION, AMENDMENTS TO THE BYE-LAWS,

SIGNING OF THE MANAGEMENT CONTRACT (SPECIAL DEAL), CANCELLATION OF THE SHARE OPTIONS IN ASEAN RESOURCES AND EXTENSION OF THE OPTION PERIOD

Financial advisor to Asean Resources and Besteam

CORPORATE FINANCE, LIMITED

Independent financial advisor to the independent board committee

SOMERLEY LIMITED

A letter from the independent board committee of Asean Resources containing its recommendation in respect of the proposed transactions is set out on page 29 of this circular. A letter from Somerley, the independent financial advisor to the independent board committee of Asean Resources, containing its recommendation in respect of the proposed transactions to the independent board committee is set out on pages 30 to 59 of this circular. A notice convening the special general meeting of Asean Resources to be held at 10:30 a.m. on Monday, 5th May, 2003 at Garden Room, 2nd Floor, Hotel Nikko Hongkong, 72 Mody Road, Tsimshatsui East, Kowloon, Hong Kong, is set out on pages 157 to 159 of this circular. A form of proxy for use at the special general meeting is enclosed. Whether or not you are able to attend the meeting, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the special general meeting or any adjourned meeting thereof. Completion and return of a form of proxy will not preclude you from attending and voting in person at the special general meeting or any adjourned meeting should you so desire.

10th April, 2003

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Expected timetable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Letter from the board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
The group reorganisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Possible mandatory offer for Asean Resources shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
Possible voluntary offer for Besteam shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	21
The effects of the Asean Resources offer and the Besteam offer . . . . . . . . . . . . . . . . . . . . .	25
Cancellation of the Asean Resources share options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	25
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26
Special general meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	27
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	28
Additional information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	28
Letter from the independent board committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	29
Letter from Somerley. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	30
Appendices
I Financial information on the Asean Resources group . . . . . . . . . . . . . . . . . . . . . . . .	60
II Unaudited pro forma financial information on the Asean Resources group
upon the implementation of the group reorganisation . . . . . . . . . . . . . . . . . . . . . .	103
III Unaudited pro forma financial information on the Besteam group
upon the implementation of the group reorganisation . . . . . . . . . . . . . . . . . . . . . .	105
IV Letters from PricewaterhouseCoopers and Anglo Chinese . . . . . . . . . . . . . . . . . . . .	109
V Property valuation on the Asean Resources group . . . . . . . . . . . . . . . . . . . . . . . . . . .	111
VI Property valuation on the Besteam group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	114
VII Summary of the articles of association of Besteam . . . . . . . . . . . . . . . . . . . . . . . . . .	135
VIII General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	151
Notice of the special general meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	157

Accompanying document

Form of proxy

DEFINITIONS

In this circular, the following expressions shall have the following meanings unless the context indicates otherwise:

“Anglo Chinese”	Anglo Chinese Corporate Finance, Limited, a licensed
	corporation under the SFO and the financial advisor to Asean
	Resources and Besteam
“Asean Resources”	Asean Resources Holdings Limited, a company incorporated
	in Bermuda with limited liability, the shares of which are
	listed on the main board of the Stock Exchange
“Asean Resources group”	Asean Resources and its subsidiaries
“Asean Resources offer”	the possible mandatory cash offer to be procured by Mexan
	Group to acquire all the outstanding Asean Resources shares
	from Asean Resources shareholders, other than those already
	owned and, or agreed to be acquired by Mexan Group or
	parties acting in concert with it, upon completion of the
	sale and purchase agreement
“Asean Resources share(s)”	ordinary share(s) of HK$0.10 each in the share capital of
	Asean Resources
“Asean Resources shareholder(s)”	holder(s) of Asean Resources shares
“asset injection agreement”	an agreement to be entered into between the Asean
	Resources group and Mexan Group or its associates pursuant
	to which Asean Resources will acquire from Mexan Group
	or its associates the entire interest in Mexan Holdings, for
	a total consideration of not more than HK$700 million
	subject to, among other things, completion of the sale and
	purchase agreement
“associate(s)”	has the meaning ascribed to it under the Listing Rules
“Besteam”	Besteam Limited, a company incorporated in the British
	Virgin Islands with limited liability. It is a wholly-owned
	subsidiary of Asean Resources and will become a subsidiary
	of United Goal Development after implementation of the
	group reorganisation
“Besteam group”	Besteam and its subsidiaries after implementation of the
	group reorganisation
“Besteam offer”	the possible voluntary cash offer to be procured by United
	Goal Development to acquire all the outstanding Besteam
	shares from the Besteam shareholders, other than those
	already owned by United Goal Development or parties acting
	in concert with it, after the implementation of the group
	reorganisation

– 1 –

DEFINITIONS

“Besteam share(s)”	ordinary share(s) of HK$0.01 each in the share capital of
	Besteam
“Besteam shareholder(s)”	holder(s) of Besteam shares
“board”	the board of directors
“bye-laws”	the bye-laws of Asean Resources
“director(s)”	the director(s) of Asean Resources
“DTZ”	DTZ Debenham Tie Leung Limited, an independent firm of
	property valuers
“Elizabeth House”	the commercial podium of Elizabeth House in Causeway
	Bay, Hong Kong
“Executive”	the Executive Director of the Corporate Finance Division
	of the SFC or any delegate of the Executive Director
“group reorganisation”	an extensive reorganisation which include the cancellation
	and distribution of the share premium and a portion of the
	retained earnings of Asean Resources. The amount arising
	from the cancellation of the share premium and the portion
	of the retained earnings will be distributed in specie to the
	Asean Resources shareholders in the form of Besteam shares
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“independent board committee”	an independent committee of the board, comprising an
	independent non-executive director, namely Mr. Cheung
	Hon Kit
“independent shareholders	the Asean Resources shareholders, other than United Goal
of Asean Resources”	Development and Mr. Peter Chan and each of their
	respective associates and concert parties
“latest practicable date”	7th April, 2003, being the latest practicable date prior to
	the printing of this circular for ascertaining certain
	information contained herein
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange

– 2 –

DEFINITIONS

“loan facility agreement” the loan facility agreement entered into between United Goal Development and Mexan Group on 22nd November, 2002, pursuant to which United Goal Development agreed to provide to Mexan Group a loan facility of up to HK$525 million at the prime rate as quoted by The Hongkong and Shanghai Banking Corporation Limited from time to time, for the sole purpose of financing completion of the purchase of the sale shares. United Goal Development had received an arrangement fee of HK$7 million from Mexan Group pursuant to the terms of the loan facility agreement “Mainland China”, “China” the People’s Republic of China which, for the purpose of or “PRC” this circular, excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan “management contract” the management contract to be entered into between, inter alia, Winsworld and Verywell in relation to the management of the Elizabeth House commencing from the date of completion of the sale and purchase agreement “Mexan Group” Mexan Group Limited, a company incorporated in the British Virgin Islands with limited liability and beneficially wholly-owned by Mr. Lau Kan Shan “Mexan Holdings” Mexan Holdings Limited, a limited liability company incorporated in Hong Kong on 11th August, 1992 and beneficially wholly-owned by Mr. Lau Kan Shan and holds all the assets to be injected into the Asean Resources group as referred to under the asset injection agreement “Mexan Holdings acquisition” the acquisition of the entire interest of Mexan Holdings by the Asean Resources group as referred to in the asset injection agreement “Mr. Peter Chan” Mr. Chan Boon Ho, Peter, the chairman of Asean Resources and a beneficial owner of 50% of the entire issued share capital of United Goal Development “optionholder(s)” holder(s) of share options “parties acting in concert” has the meaning ascribed to it under the Takeovers Code “preliminary agreement” the preliminary sale and purchase agreement dated 8th October, 2002, as amended and supplemented by two supplemental agreements dated 8th November, 2002 and 22nd November, 2002, respectively, all of which were entered into between United Goal Development as vendor and Mexan Group as purchaser, in relation to sale and purchase of the sale shares which was subsequently superseded by the sale and purchase agreement

– 3 –

DEFINITIONS

“proposed transactions”	the group reorganisation, the amendments to the bye-laws,
	the signing of the management contract and the share option
	agreement which sets out, amongst other things, terms and
	conditions of the conditional cancellation of the share
	options and the extension of the option period of the share
	options
“sale and purchase agreement”	the sale and purchase agreement dated 20th December, 2002
	as amended by a supplemental agreement dated 21st
	February, 2003 entered into between United Goal
	Development as vendor and Mexan Group as purchaser, in
	relation to the acquisition of the sale shares subject to,
	amongst other things, the group reorganisation being
	implemented, for an aggregate consideration of
	approximately HK$839.7 million or HK$0.8784 per sale
	share
“sale shares”	the 955,970,289 Asean Resources shares, representing
	approximately 74.3% of the entire issued share capital of
	Asean Resources as at 8th October, 2002, to be acquired
	by Mexan Group from United Goal Development and
	Mr. Peter Chan
“SFC”	the Securities and Futures Commission of Hong Kong
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong)
“special general meeting”	the special general meeting of Asean Resources to be held
	at 10:30 a.m. on Monday, 5th May, 2003 at Garden Room,
	2nd Floor, Hotel Nikko Hongkong, 72 Mody Road,
	Tsimshatsui East, Kowloon, Hong Kong and any
	adjournment thereof
“share option(s)”	option(s) granted by the directors under the share option
	scheme which entitle the optionholders to subscribe for a
	total of 104,200,000 Asean Resources shares
“share option agreement”	the agreement dated 18th March, 2003 made between Asean
	Resources and the optionholders in relation to, inter alia,
	the conditional cancellation of the share options and the
	extension of the option period of the share options upon
	the terms and conditions therein contained
“share option scheme”	the share option scheme adopted by Asean Resources on
	8th September, 1998
“Somerley”	Somerley Limited, a licensed corporation under the SFO
	and the independent financial advisor to the independent
	board committee

– 4 –

DEFINITIONS

“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“subsidiaries”	has the meaning ascribed to it under the Companies
	Ordinance (Chapter 32 of the Laws of Hong Kong), as
	amended from time to time
“Takeovers Code”	the Hong Kong Code on Takeovers and Mergers
“United Goal Development”	United Goal Development Limited, a company incorporated
	in the British Virgin Islands with limited liability, which is
	the controlling Asean Resources shareholder, and the vendor
	under the sale and purchase agreement
“Verywell”	Verywell Services Limited, an indirect wholly-owned
	subsidiary of Asean Resources and would become a wholly-
	owned subsidiary of Besteam after the implementation of
	the group reorganisation
“Winsworld”	Winsworld Properties Limited, the registered owner of the
	Elizabeth House and is an indirect wholly-owned subsidiary
	of Asean Resources
“HK$” and “cent(s)”	Hong Kong dollar(s) and cent(s), the lawful currency of
	Hong Kong
“RMB”	Renminbi, the lawful currency of the PRC
“US$”	United States dollar(s), the lawful currency of the United
	States of America
“%”	per cent.

For the purposes of illustration only and unless otherwise stated, amounts denominated in Renminbi and United States dollars have been translated into Hong Kong dollars at the following exchange rates:

==> picture [107 x 22] intentionally omitted <==

Such translations should not be construed as a representation that the amounts in question have been, could have been or could be converted at any particular rate or at all.

– 5 –

EXPECTED TIMETABLE

Despatch of this circular to the Asean Resources shareholders . . . . . . . Thursday, 10th April, 2003

Last day of dealings in Asean Resources shares on

a cum-rights basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 24th April, 2003

First day of dealings in Asean Resources shares

on an ex-rights basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 25th April, 2003

Latest time for lodging transfers of Asean Resources shares in order to qualify for the distribution of

Besteam shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:30 p.m. on Monday, 28th April, 2003

Register of members of Asean Resources closed to determine eligibility for the distribution of Besteam shares, both dates inclusive . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 29th April, 2003 to Monday, 5th May, 2003

Latest time for lodging forms of proxy

for the special general meeting . . . . . . . . . . . . . . . . . . . . . 10:30 a.m. on Saturday, 3rd May, 2003

Record date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Monday, 5th May, 2003

Special general meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10:30 a.m. on Monday, 5th May, 2003

On the condition that all the conditions precedent to the completion of the sale and purchase agreement are fulfilled on 5th May, 2003:

Completion of the sale and purchase agreement

and the asset injection agreement, if applicable . . . . . . . . . . . . . . . . . . . . . . Friday, 9th May, 2003

Asean Resources and Besteam composite offer documents

to be despatched on or around . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Monday, 12th May, 2003

Open date of the Asean Resources offer and

the Besteam offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Monday, 12th May, 2003

Latest time for the acceptance of the Asean Resources offer and the Besteam offer,

if they are not revised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4:00 p.m. on Monday, 2nd June, 2003

Closing date of the Asean Resources offer and

the Besteam offer, if they are not revised . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 2nd June, 2003

Announcement of results of the Asean Resources offer

and the Besteam offer on newspapers . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 3rd June, 2003

Latest date for posting of remittance to the Asean Resources shareholders and the Besteam shareholders respectively in respect of acceptances lodged on or before 4:00 p.m. on 2nd June, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 12th June, 2003

Certificates for the Besteam shares to be despatched to the qualifying Besteam shareholders who do not accept the Besteam offer on or before . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 12th June, 2003

Further announcement will be made with any changes for this timetable.

– 6 –

LETTER FROM THE BOARD

ASEAN RESOURCES HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

Executive directors: Chan Boon Ho, Peter (Chairman) Cheng Kam Biu, Wilson Lo Lin Shing, Simon Chan Chi On, Derek Wong Kam Cheong, Stanley Lai Yu Ting Lai Hing Chiu, Dominic

Non-executive director: To Hin Tsun, Gerald

Registered office: Clarendon House Church Street Hamilton HM 11 Bermuda

Principal place of business in Hong Kong: 39th Floor New World Tower I 18 Queen’s Road Central Hong Kong

Independent non-executive directors: Cheung Hon Kit Ng Wai Hung

10th April, 2003

To the Asean Resources shareholders and, for information only, the optionholders

Dear Sir or Madam,

GROUP REORGANISATION, AMENDMENTS TO THE BYE-LAWS, SIGNING OF THE MANAGEMENT CONTRACT (SPECIAL DEAL), CANCELLATION OF THE SHARE OPTIONS IN ASEAN RESOURCES AND EXTENSION OF THE OPTION PERIOD

INTRODUCTION

Asean Resources, Mexan Group, Besteam and United Goal Development jointly announced on 21st February, 2003, among others, that:

– the board had been requested by United Goal Development, the controlling Asean Resources shareholder, to place before the Asean Resources shareholders the proposal of the group reorganisation which, if approved and implemented, would result in the Asean Resources shareholders receiving the Besteam shares on a one for one basis to their respective shareholdings in Asean Resources;

– 7 –

LETTER FROM THE BOARD

the board had also been informed by United Goal Development that United Goal Development as vendor and Mexan Group as purchaser had entered into the preliminary agreement and the sale and purchase agreement. Pursuant to the sale and purchase agreement, subject to the implementation of the group reorganisation in full, Mexan Group will acquire the sale shares from United Goal Development and Mr. Peter Chan, representing approximately 74.3% of the entire issued share capital of Asean Resources, for approximately HK$839.7 million, payable in cash, equivalent to HK$0.8784 per sale share;
provided that the group reorganisation is implemented in full, United Goal Development will procure to extend a voluntary offer to acquire from all Besteam shareholders, other than United Goal Development and Mr. Peter Chan and any person acting in concert with any one of them, the Besteam shares at HK$0.1216 per Besteam share in cash;
pursuant to the sale and purchase agreement, Mexan Group had requested United Goal Development to procure Asean Resources to enter into the asset injection agreement for the purchase by the Asean Resources group at a consideration of not more than HK$700 million of certain assets owned by Mexan Group or its associates after completion of the group reorganisation. The asset injection agreement has not yet been signed and it may or may not proceed; and
as at 21st February, 2003, Asean Resources had granted share options to a number of its directors and full time employees to subscribe for 104,200,000 Asean Resources shares in aggregate at an exercise price of HK$0.68 per Asean Resources share, subject to adjustment. It is one of the conditions to the sale and purchase agreement that all outstanding share options granted by Asean Resources under its share option scheme shall be cancelled. The board agreed, subject to the approval of the independent shareholders of Asean Resources, to pay a consideration from the internal resources of Asean Resources for the cancellation of such share options.

THE GROUP REORGANISATION

The effect of the group reorganisation

At the request of United Goal Development, the controlling Asean Resources shareholder holding approximately 68.3% of its entire issued share capital, the board will place before the Asean Resources shareholders the proposal of the group reorganisation. The group reorganisation will result in the Asean Resources shareholders registered as such on 5th May, 2003, being the date for the determination of the eligibility, receiving the Besteam shares on a one for one basis to their respective shareholdings in Asean Resources.

Besteam will hold all the interests of the Asean Resources group, other than its interests in the Elizabeth House and cash of not less than HK$707.5 million, subject to adjustment. These interests comprise principally interests of approximately 24.8% in JW Marriott Hotel Hong Kong in Admiralty, Hong Kong, approximately 47.7% in Hotel Nikko Hongkong in Tsimshatsui, Kowloon, Hong Kong, 57% in a residential redevelopment project at Nos. 33 and 35 Island Road, Hong Kong, 55% in the remaining unsold units of The Colonnade, a residential development at 152 Tai Hang Road, Hong Kong, various investment properties and properties held for or under development,

– 8 –

LETTER FROM THE BOARD

being primarily holdings of agricultural land in the New Territories, Hong Kong. There will be no material change in the management of these interests and, in particular, all the present executive directors will be the directors of Besteam and they will resign as directors of Asean Resources, subject to the repayment by Mexan Group of the loan to United Goal Development in full under the loan facility agreement, on the earliest date as permitted by the Takeovers Code. Details of the loan facility agreement are set out under the paragraph headed “Loan facility agreement” in this section.

The mechanics of the group reorganisation

The group reorganisation will be implemented by a cancellation and distribution of the share premium account of Asean Resources of approximately HK$929.8 million and by the distribution of a portion of the retained earnings of Asean Resources. The total amount arising from the cancellation of the share premium account and the portion of the retained earnings of Asean Resources will be distributed in specie in the form of Besteam shares to all Asean Resources shareholders.

The exact amount of the distribution in specie in the form of Besteam shares will be determined after the carrying value of Besteam has been ascertained immediately prior to completion of the group reorganisation.

The capital repayment and dividend distribution will result in each Asean Resources shareholder receiving the same number of Besteam shares as he/she/it has in Asean Resources. No application will be made for the listing of the Besteam shares on any stock exchange.

Subject to the approval of the independent shareholders of Asean Resources, Asean Resources will complete an internal group reorganisation under which Besteam will acquire, through the acquisition of a number of intermediate holding companies and the assignment of various intergroup loans undertakings of Asean Resources and repayment of cash, all the interests of the Asean Resources group other than its interests in the Elizabeth House and cash of not less than HK$707.5 million, subject to adjustment. United Goal Development, Mr. Peter Chan and their respective associates and concert parties will abstain from voting on the special resolution numbered 2 for the approval of the group reorganisation in the special general meeting. The consideration for such acquisition will be the issue of such number of Besteam shares, which will result in the number of Besteam shares in issue equal to the number of Asean Resources shares in issue on the record date on 5th May, 2003 to Asean Resources. Accordingly, the capital repayment and dividend distribution will result in all Asean Resources shareholders receiving:

for each Asean Resources share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . one Besteam share

The Besteam shares to be issued will rank pari passu in all respects with each other.

The conditions of the group reorganisation

The group reorganisation is conditional upon:

the passing of a special resolution approving the group reorganisation by the independent shareholders of Asean Resources;
compliance with section 46(2) of the Companies Act 1981 of Bermuda;

– 9 –

LETTER FROM THE BOARD

the agreement of the Asean Resources group’s bankers, if required, to the release of guarantees by Asean Resources and any of its retained subsidiaries on the obligations of Besteam or its subsidiaries following the implementation of the group reorganisation;
the consent, if required, of any of the Asean Resources group’s joint venture partners; and
any other third parties’ consent or approval, including all regulatory consents, required to give effect to the group reorganisation.

As at the latest practicable date, none of the conditions of the group reorganisation mentioned above has been fulfilled.

Asean Resources group and shareholding structure immediately before and immediately after the implementation of the group reorganisation

Group structure immediately before the group reorganisation

The chart below shows in summary form the group and shareholding structure of Asean Resources immediately before the implementation of the group reorganisation:

==> picture [384 x 135] intentionally omitted <==

==> picture [364 x 95] intentionally omitted <==

----- Start of picture text -----

Hotel
interests:
55% 57% interest Investment
24.8% - JW
Investment in interest in Marriott in the properties and Other
the Elizabeth the remaining Hotel redevelopment properties held assets and Besteam
unsold units of Nos. 33 & 35 for or under liabilities
House of The Hong Kong Island Road, development (note 3)
Colonnade 47.7% - Hotel Hong Kong (note 2)
Nikko
Hongkong
----- End of picture text -----

– 10 –

LETTER FROM THE BOARD

Group structure immediately after the group reorganisation

The chart below shows in summary form the group and shareholding structure of Asean Resources and Besteam immediately after the implementation of the group reorganisation:

==> picture [382 x 279] intentionally omitted <==

----- Start of picture text -----

Chow Tai Fook
Mr. Peter Chan Enterprises
Limited
50% 50%
Other Asean Resources
United Goal Development shareholders
6% (77,190,000 Asean Resources shares 68.3% (878,780,289 Asean Resources shares 25.7% (330,512,547 Asean Resources shares
and 77,190,000 Besteam shares) and 878,780,289 Besteam shares) and 330,512,547 Besteam shares)
Asean Resources Besteam
(note 1) (note 1)
Investment in the Hotel
Elizabeth House interests:
and cash of not
less than 55% 24.8% - JW 57% interest Investment
HK$707.5 interest in Marriott in the properties and Other assets
million, theunsoldremainingunits Hotel ofredevelopmentNos. 33 & 35 propertiesfor or underheld and liabilities
subject to of The Hong Kong Island Road, development (Note 3)
bank loan relatedadjustment, and Colonnade 47.7% - Hong Kong (Note 2)
to the Elizabeth Hotel Nikko
House Hongkong
----- End of picture text -----

Notes:

United Goal Development, which is held jointly and equally by Mr. Peter Chan and Chow Tai Fook Enterprises Limited, holds 878,780,289 Asean Resources shares and will hold 878,780,289 Besteam shares, representing approximately 68.3% of the entire issued share capital of Asean Resources and Besteam, respectively. Mr. Peter Chan in his own capacity currently holds 77,190,000 Asean Resources shares and will hold 77,190,000 Besteam shares, representing approximately 6.0% of the entire issued share capital of Asean Resources and Besteam, respectively.
All the investment properties including, among others, warehouse, shops and rental properties which are located in Hong Kong and the PRC, are presently wholly-owned by Asean Resources. Properties held for or under development include a piece of agricultural land in Yuen Long which is presently wholly-owned by Asean Resources and the remaining properties held for or under development are presently held through associated companies.
Other assets and liabilities mainly comprise accounts and other receivables, deposits and prepayments, other investments, cash and bank balances, accounts payable, deposits received and accrued charges and bank loans.

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LETTER FROM THE BOARD

Unaudited pro forma financial information on the Asean Resources group upon the implementation of the group reorganisation

The following is the unaudited pro forma combined profit and loss account for the two financial years ended respectively on 31st March, 2001 and 31st March, 2002, and the unaudited pro forma statement of assets and liabilities as at 31st March, 2002 of the Asean Resources group prepared on the basis set out in appendix II on page 103 of this circular.

Unaudited pro forma combined profit and loss account

		Year ended 31st March,
	2002 2001
	HK$’000 HK$’000
Turnover	90,789 91,403

Profit from operations	76,347 77,432
Finance costs	(29,326) (47,373)
Profit before taxation	47,021 30,059
Taxation		– –
Profit attributable to Asean Resources shareholders	47,021 30,059

Earnings per Asean Resources share based on
1,286,482,836 Asean Resources shares in issue	3.66 cents 2.34 cents

Unaudited pro forma statement of assets and liabilities
		31st March, 2002
		HK$’000
Fixed assets		1,900,014
Current assets
Accounts and other receivables, deposits and prepayments		16,233
Cash and bank balances		663,212
		679,445
Current liabilities
Accounts payable, deposits received and accrued charges		24,928
Dividend payable		481
Bank loans, secured		44,000
		69,409
Net current assets		610,036
Total assets less current liabilities		2,510,050
Bank loans, secured		685,000
Unaudited pro forma net assets		1,825,050

Unaudited pro forma net asset value per Asean Resources
share based on 1,286,482,836 Asean Resources shares in issue		HK$1.42

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LETTER FROM THE BOARD

Unaudited pro forma financial information on the Besteam group upon the implementation of the group reorganisation

The following is the unaudited pro forma combined profit and loss account for the two financial years ended respectively on 31st March, 2001 and 31st March, 2002, and the unaudited pro forma statement of assets and liabilities as at 31st March, 2002 of the Besteam group prepared on the basis set out in appendix III on page 105 of this circular:

Unaudited pro forma combined profit and loss account

		Year ended	Year ended	31st March,
		2002		2001
	HK$’000			HK$’000
Turnover		528,769		595,385

(Loss)/profit from operations	(215,889)			130,688
Finance costs		(2,230)		(2,744)
Share of results of associated companies		3,044		(18,204)
Write down in value of listed securities		–		(333,670)
Loss before taxation	(215,075)			(223,930)
Taxation		(1,998)		(4,731)
Loss after taxation	(217,073)			(228,661)
Minority interests		(16,928)		(78,721)
Loss attributable to Besteam shareholders	(234,001)			(307,382)

Loss per Besteam share based on
1,286,482,836 Besteam shares in issue	(18.19 cents)			(23.89 cents)

Unaudited pro forma statement of assets and liabilities
			31st March, 2002
				HK$’000
Fixed assets				32,922
Investments in associated companies				1,027,265
Properties held for/under development				240,135
Long term investments				3,001
Long term receivable				6,774
Current assets
Accounts and other receivables, deposits and prepayments				144,324
Properties held for sale				229,541
Other investments				3,847
Cash and bank balances				40,810
				418,522
Current liabilities
Accounts payable, deposits received and accrued charges				41,647
Taxation				5,723
Bank loans, secured				851
				48,221
Net current assets				370,301
Total assets less current liabilities				1,680,398
Minority interests				114,844
Bank loans, secured				86,394
Unaudited pro forma net assets				1,479,160

Unaudited pro forma net asset value per Besteam
share based on 1,286,482,836 Besteam shares in issue				HK$1.15

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LETTER FROM THE BOARD

Reasons for the group reorganisation

United Goal Development, being the controlling Asean Resources shareholder, has requested the board to place the group reorganisation before its shareholders for approval. The board finds no hesitation to put the group reorganisation to the Asean Resources shareholders for their consideration, as it appears that the same is to the benefit of the Asean Resources shareholders. The board considers that the group reorganisation can facilitate the sale and purchase agreement and the Asean Resources offer in order for the Asean Resources shareholders to realise their investment in Asean Resources at a substantial premium to the traded market price or to retain their investment through holdings in Asean Resources, Besteam or either company. It is also being made in response to the low valuation placed on Asean Resources by the market over an extended period. If the Asean Resources offer and the Besteam offer are made, the aggregate price to be received per share in Asean Resources and Besteam will amount to approximately HK$1.00, representing a discount of approximately 61.1% to the audited consolidated net asset value per Asean Resources share of approximately HK$2.57 as at 31st March, 2002.

Save for the interest in the Elizabeth House and cash of not less than HK$707.5 million, subject to adjustment, all the interests in other properties and hotels held by Asean Resources will be transferred to Besteam. Given that:

the assets held by Asean Resources had, as a whole, generated losses for Asean Resources in the two financial years ended 31st March, 2002 and in respect of those assets held through joint ventures, consents from the joint venture partners are required in order to sell those assets in the open market;
the development of properties held by Asean Resources will require substantial cash resources to complete such development before they can be disposed of in the open market at a higher price; and
investment in the hotels are held by Asean Resources through associated companies with no controlling interests in the hotels and no dividend had been received by Asean Resources from the operations of the hotels.

Therefore, the board considers that it is a good opportunity for the Asean Resources shareholders to realise all the interests in other properties and hotels held by Asean Resources through the Besteam offer even though the offer price per Besteam share of HK$0.1216 is at a discount of approximately 88.0% to the unaudited pro forma adjusted net tangible asset value of approximately HK$1.01 per Besteam share. Since the group reorganisation and the Besteam offer are not conditional on the sale and purchase agreement and the Asean Resources offer, therefore, if the sale and purchase agreement does not proceed and consequently the Asean Resources offer will not proceed, United Goal Development and the board still intend to proceed with the group reorganisation and the Besteam offer and propose to declare a cash dividend of not less than HK$650 million. United Goal Development will seek another purchaser for its controlling shareholding in Asean Resources, which purchase will be conditional upon a similar offer being extended to all the other Asean Resources shareholders. Accordingly, if the Asean Resources shareholders accept the Besteam offer, the Asean Resources shareholders will receive HK$0.1216 per Besteam share and a cash dividend of approximately HK$0.5053 per Asean Resources share while remaining as Asean Resources shareholders.

In the event that the Asean Resources offer does proceed, the Asean Resources shareholders will receive HK$0.8784 per Asean Resources share and HK$0.1216 per Besteam share. Therefore, the board considers that although the combined consideration payable in the Asean Resources

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LETTER FROM THE BOARD

offer and the Besteam offer in a total of HK$1.00 for each share held by the Asean Resources shareholders represents a discount of approximately 53.1% to the aggregate of the unaudited pro forma adjusted consolidated net tangible asset value of approximately HK$1.12 per Asean Resources share and the unaudited pro forma adjusted net tangible asset value of approximately HK$1.01 per Besteam share, the Asean Resources shareholders can realise their investment in Asean Resources at a premium of approximately 92.3% to the closing price of HK$0.52 per Asean Resources share as quoted on the Stock Exchange on 8th October, 2002, being the last trading day on which the Asean Resources shares were traded on the Stock Exchange prior to the suspension in trading of the Asean Resources shares, through the Asean Resources offer and the Besteam offer in the current difficult market condition or to retain their investment through holdings in Asean Resources, Besteam or either company.

AGREEMENTS

Preliminary and sale and purchase agreements

The directors have also been informed by United Goal Development that United Goal Development has entered into the preliminary agreement with Mexan Group. The preliminary agreement was superseded by the sale and purchase agreement entered into between the same parties. Pursuant to the sale and purchase agreement, Mexan Group agreed to acquire conditionally upon, amongst other things, the group reorganisation being implemented, the sale shares held by United Goal Development and Mr. Peter Chan, representing approximately 74.3% of the entire issued share capital of Asean Resources as at 8th October, 2002, for an aggregate consideration of approximately HK$839.7 million, equivalent to HK$0.8784 per sale share. The consideration is payable in the following manner:

HK$50 million upon the signing of the preliminary agreement, which amount has been paid;
further HK$50 million at the earlier of the 31st day from the date of the preliminary agreement and the signing date of the sale and purchase agreement, which amount has also been paid; and
the balance upon completion of the sale and purchase agreement.

The conditions of the sale and purchase agreement

The sale and purchase agreement is conditional upon, amongst other things:

completion of the group reorganisation;
the entering into of the management contract;
the cancellation of all share options granted pursuant to the share option scheme; and
the Asean Resources shares remaining listed and traded on the Stock Exchange, save for any temporary suspension.

As at the latest practicable date, the first three conditions have not yet been fulfilled. In particular, satisfaction of these three conditions is subject to the result of the special general meeting. However, completion of the sale and purchase agreement is not conditional upon the signing of the asset injection agreement or the completion thereof.

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LETTER FROM THE BOARD

Under the sale and purchase agreement, it was agreed that cash amount of at least HK$719 million should remain in Asean Resources, which is approximately the outstanding balance of the mortgage on the Elizabeth House of approximately HK$696.5 million as at the date of the sale and purchase agreement. The cash amount of HK$719 million should be adjusted downwards by the same amount as any reduction in the mortgage in accordance with the sale and purchase agreement. Since the date of the sale and purchase agreement, HK$11.5 million of the mortgage has been repaid, reducing the mortgage loan balance to HK$685 million. Accordingly, the cash remaining in Asean Resources will be adjusted to HK$707.5 million and is still subject to further adjustment if additional mortgage repayments are made before completion of the sale and purchase agreement.

The asset injection agreement

Mexan Group has requested United Goal Development to procure the Asean Resources group to enter into the asset injection agreement for the purchase by the Asean Resources group at a consideration of not more than HK$700 million, of Mexan Holdings, a company beneficially wholly-owned by Mr. Lau Kan Shan and holds all the assets to be injected into the Asean Resources group. It is the intention of Mexan Group to inject Mexan Holdings into the Asean Resources group after completion of the sale and purchase agreement. Neither the preliminary agreement nor the sale and purchase agreement has specified what kind of assets will be injected into Asean Resources. The Stock Exchange considered that they might treat Asean Resources as a new listing applicant if any unlisted assets are to be injected by Mexan Group or its associates into Asean Resources shortly after the completion of the sale and purchase agreement. Asean Resources has appealed to the Stock Exchange for a review of the decision and as at the latest practicable date, the Stock Exchange has not yet come to a final conclusion. A further announcement will be made when the board has been notified the results of the review decision and on the progress of the asset injection agreement. Pursuant to the sale and purchase agreement, United Goal Development will use its reasonable endeavours to procure the Asean Resources group to enter into the asset injection agreement within 10 business days from the date on which Mexan Group has been informed by Asean Resources of the review decision from the Stock Exchange or on or before 22nd April, 2003, whichever is earlier. However, the directors will ensure that the entering into of the asset injection agreement complies with the Listing Rules and any other relevant regulatory requirements.

The Mexan Holdings acquisition

Mexan Holdings is an investment holding company which acquired 79% shareholding interest in 上海茂盛國際貿易有限公司 (Shanghai Mexan International Trading Company Limited, “Mexan Trading”) on 30th September, 2002 and 55% shareholding interest in 寧波北侖港高速公路有限公司 (Ningbo Beilungang Highway Company Limited) (“BLG Highway”) on 18th October, 2002.

Mexan Trading was incorporated in the PRC as a limited liability company on 22nd August, 2000 and commenced operations later in the same month. Its principal activities involve international trading, re-export trading, agency and trading within the custom-bonded zone, trading with the non-bonded zone import and export companies and business consultancy within the custom-bonded zone. Mexan Trading is also engaged in sale of building and construction materials for highways in the PRC. Mexan Trading is owned as to 21% by 上海茂盛半島經濟發展有限公司 (Shanghai Mexan Island Economic Development Company Limited) (“Shanghai Mexan Island”), which is indirectly controlled by Mr. Lau Kan Shan, and as to 79% by Mexan Holdings and any profits arising from the operation will be shared between Shanghai Mexan Island and Mexan Holdings in proportion to their respective shareholding interests. The total paid-up capital of Mexan Trading is HK$94.3 million which has been fully paid up. Shanghai Mexan Island is owned as to 82% by 上海茂盛企業發展（集團）有限公司 (Shanghai Mexan Enterprise Development (Group) Company Limited) (“Shanghai Mexan Enterprise”) and 18% by 昆山茂盛實業投資有限公司 (Kunshan Mexan Industrial Investment Co., Ltd.) (“Kunshan Mexan”). Kunshan Mexan is owned as to 75%

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LETTER FROM THE BOARD

by Mr. Lau Kan Shan and as to 25% by 李劍 (Li Jian), a nephew of Mr. Lau Kan Shan. Shanghai Mexan Enterprise is owned as to approximately 58.8% by Mr. Lau Kan Shan, approximately 21.2% by Kunshan Mexan and approximately 20.0% by 中機電投資有限公司 (“Zhongjidian Investment Co., Ltd.”).

BLG Highway was incorporated in the PRC as a limited liability company on 25th July, 2002 and commenced operation in August 2002. BLG Highway purchased from 寧波市交通局 (Ningbo Communication Bureau) the right to operate a highway of total distance of approximately 51.4 km and all the accessory facilities along such highway for a minimum of 25 years, with a maximum of 30 years subject to further approval, on 5th September, 2002. Such highway starts from 大 (Daqi) to 西塢 (Xiwu), the whole section of which is in the area of 浙江省寧波市 (Ningbo city, Zhejiang Province) and is one part of “同三 ”國道主幹線 (the primary trunk line of national highway named Tongsan), starting from 黑龍江省同江市 (Tongjiang city, Heilongjiang Province) to 海南省三亞市 (Sanya city, Hainan Province). It connects to other highways, including 甬台溫沿海高速公路 (Yong Tai Wen Coastal Highway), 滬杭甬高速公路 (Hu Hang Yong Highway), and 甬金高速公路 (Yong Jin Highway) and 杭州灣大橋垮海通道 (Hangzhou Bay Cross Harbour Bridge), both of which are under construction. It forms part of 寧波繞城高速公路 (Ningbo Circulating Highway) and is the main entrance to 北侖港 (Beilungang). BLG Highway is owned as to 45% by Shanghai Mexan Enterprise which is controlled by Mr. Lau Kan Shan, and as to 55% by Mexan Holdings and any profits arising from the operation will be shared between Shanghai Mexan Enterprise and Mexan Holdings in proportion to their respective shareholding interests. The total paid-up capital of BLG Highway is HK$607.3 million, which has been fully paid up.

Reasons for the Mexan Holdings acquisition

The directors of Mexan Group believe that Asean Resources will benefit from the Mexan Holdings acquisition as they expect the underlying businesses of Mexan Holdings have a considerable growth potential in the future.

Loan facility agreement

A secured loan facility agreement was entered into by United Goal Development and Mexan Group on 22nd November, 2002 for the sole purpose of financing completion of the purchase of the sale shares, representing approximately 74.3% of the entire issued share capital of Asean Resources, under which United Goal Development will provide a loan facility of up to HK$525 million to Mexan Group. Such loan will bear interest at prime rate from time to time quoted by The Hongkong and Shanghai Banking Corporation Limited.

Pursuant to the terms of the loan facility agreement, United Goal Development had received an arrangement fee of HK$7 million from Mexan Group. The loan will be repaid on the date falling six months after the date of the formal loan agreement or four months after the date of drawdown, whichever shall be earlier. Pursuant to the loan facility agreement, Mexan Group will not exercise any voting right on the sale shares without consent of United Goal Development, and United Goal Development shall be authorised and have full discretion to vote in respect of the sale shares on all matters reasonably necessary to protect the assets of Asean Resources and United Goal Development’s interests until the loan is fully repaid by Mexan Group. The loan facility agreement constitutes United Goal Development a presumed party acting in concert with Mexan Group under the Takeovers Code. Save for the preliminary agreement and the sale and purchase agreement, United Goal Development and Mexan Group and their respective concert parties have not dealt in any Asean Resources shares in the six months prior to the date of this circular.

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LETTER FROM THE BOARD

POSSIBLE MANDATORY OFFER FOR ASEAN RESOURCES SHARES

Subject to the completion of the sale and purchase agreement, Mexan Group and its concert parties will own the sale shares, and Mexan Group will be required to make an unconditional cash offer for all the outstanding Asean Resources shares, other than the shares already held and, or agreed to be acquired by Mexan Group or parties acting in concert with it, in accordance with the Takeovers Code. Presently, neither Mexan Group nor any party acting in concert with it holds any Asean Resources shares or has traded in any such shares during the six-month period preceding the date of this circular.

The Asean Resources offer

Upon completion of the sale and purchase agreement, Mexan Group will procure to extend an unconditional cash offer to all the Asean Resources shareholders to acquire all the outstanding Asean Resources shares, other than those already owned and, or agreed to be acquired by Mexan Group or parties acting in concert with it, on the terms to be set out in the offer document to be despatched on or around 12th May, 2003 and the accompanying form of acceptance and transfer and on the following basis:

for each Asean Resources share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.8784 in cash

The offer price per Asean Resources share is the same as the price to be paid for each sale share and is determined after taking into account the unaudited pro forma adjusted consolidated net tangible asset value of the Asean Resources group after completion of the group reorganisation. The total consideration of the Asean Resources offer based on 330,512,547 Asean Resources shares, representing the number of Asean Resources shares in issue as at the latest practicable date, other than those Asean Resources shares already owned and, or agreed to be acquired by Mexan Group or parties acting in concert with it, amounts to approximately HK$290.3 million.

The Asean Resources shares to be acquired under the Asean Resources offer will be acquired ex the entitlement to the capital repayment and dividend distribution in specie but with the right to all future dividends and distributions declared, paid or made on or after the completion of the sale and purchase agreement by Mexan Group and free from all third party rights attaching thereto on or after that date.

Seller’s ad valorem stamp duty in connection with the acceptance of the Asean Resources offer amounting to HK$1.00 for every HK$1,000 or part thereof of the consideration will be payable by the accepting Asean Resources shareholders and will be deducted from the consideration payable on acceptance of the Asean Resources offer and then Mexan Group will pay the stamp duty on behalf of the accepting Asean Resources shareholders.

It is the responsibility of the Asean Resources shareholders, whose addresses as stated in the register of members of Asean Resources are outside Hong Kong at the close of business on the record date and who wish to accept the Asean Resources offer and take any action in relation thereto, to satisfy themselves as to the full observance of the laws of any relevant jurisdiction in connection therewith, including the obtaining of any governmental, exchange control or other consent which may be required to comply with other necessary formalities or legal requirements. Any such Asean Resources shareholders will be responsible for the payment of any transfer or other taxes by whomsoever payable due in respect of that jurisdiction.

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LETTER FROM THE BOARD

In the event that the sale and purchase agreement is not completed and hence the Asean Resources offer does not proceed, United Goal Development and the board intend to proceed with the group reorganisation and the Besteam offer and propose to declare a cash dividend of not less than HK$650 million or approximately HK$0.5053 per Asean Resources share, based on 1,286,482,836 Asean Resources shares in issue as at the latest practicable date. United Goal Development will seek another purchaser for its controlling shareholding in Asean Resources, which purchase will be conditional upon a similar offer being extended to all the other Asean Resources shareholders.

Background and intentions of Mexan Group regarding Asean Resources

Mexan Group is beneficially and wholly-owned by Mr. Lau Kan Shan. Mr. Lau, aged 45, is the chairman of Mexan Group. Mr. Lau had worked in various trading companies in the PRC for about 8 years before he started his own trading business in Hong Kong in the 1980s. Mr. Lau is currently engaged in a wide variety of businesses including PRC highway investment, highway construction and related business, real estate investment and financial services. Mr. Lau is a Hong Kong resident.

Save for the interests in Mexan Holdings which may be injected into Asean Resources under the asset injection agreement, Mexan Group intends to maintain the existing business, which is property investment, of Asean Resources. Moreover, Mexan Group intends to review the operation of Asean Resources and may seek further investment opportunities if there arise such opportunities, which Mexan Group may think fit and are allowed under relevant regulatory provisions.

Management contract for the Elizabeth House

Under the sale and purchase agreement, the management contract, which is conditional upon completion of the sale and purchase agreement, will be entered into between, inter alia, Winsworld and Verywell, a wholly-owned subsidiary of Besteam after implementation of the group reorganisation and is the existing manager of the Elizabeth House, upon completion of the sale and purchase agreement under which Verywell will manage, deal with and handle all matters in relation to the management of the Elizabeth House for a period of three years commencing from the date of completion of the sale and purchase agreement. According to the management contract, Verywell will guarantee an amount of not less than HK$78 million per year in favour of Winsworld for a period of three years only from the date of completion of the sale and purchase agreement regarding the rental income and other income derived from the Elizabeth House, net of all outgoings directly and indirectly related to the management of the Elizabeth House. Under the management contract, Winsworld will receive all the rental income from tenants of Elizabeth House, and Verywell will pay all outgoings in relation to the management of Elizabeth House and claim reimbursement from Winsworld thereafter. At the end of each service year, as defined in the management contract, any excess or shortfall to the annual guaranteed amount of HK$78 million will be settled between Winsworld and Verywell. Verywell shall retain all the management fees. Mr. Peter Chan will guarantee the due performance of the obligations of Verywell under the management contract. Verywell will be wholly-owned by Besteam after implementation of the group reorganisation which, in turn, is controlled by United Goal Development and Mr. Peter Chan. Since Mr. Peter Chan is a director and the chairman of Asean Resources, therefore, Verywell is a connected person under the Listing Rules. The entering into of the management contract by Winsworld and Verywell will constitute a connected transaction for Asean Resources under the Listing Rules and will be subject to the approval by the independent shareholders of Asean Resources, being Asean Resources shareholders other than United Goal Development and Mr. Peter Chan and each of their respective associates and concert parties. The entering into of the management contract is also a special deal

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LETTER FROM THE BOARD

under the Takeovers Code and Asean Resources is, therefore, required to obtain (i) the consent of the Executive in compliance with rule 25 of the Takeovers Code; (ii) a fair and reasonable opinion issued by an independent financial advisor; and (iii) approval by the independent shareholders of Asean Resources. Asean Resources had made an application to the Executive and the Executive had indicated that it would grant the consent under rule 25 of the Takeovers Code for the special deal subject to the approval by the independent shareholders of Asean Resources, being the Asean Resources shareholders, other than United Goal Development and Mr. Peter Chan and each of their respective associates and concert parties, by way of poll.

A further announcement will be made regarding the arrangement for the management of the Elizabeth House if the sale and purchase agreement is not completed.

Continuing connected transaction

As the transactions, namely the provision of management services by Verywell to Winsworld as described above, will be conducted in the ordinary course of business of the Asean Resources group on a regular basis, during the period of three years from the date of completion of the sale and purchase agreement, the directors consider that it would be impracticable and unduly onerous on the part of Asean Resources if Asean Resources is required to fully comply with the disclosure requirements and, or to obtain approval from the independent shareholders of Asean Resources for the transactions contemplated under the management contract on each occasion whenever they arise. Accordingly, Asean Resources has applied to and obtained from the Stock Exchange a waiver from strict compliance with rule 14.26 of the Listing Rules in respect of the transactions contemplated under the management contract for the three financial year ending 31st March, 2006, subject to the following conditions:

that the transactions contemplated under the management contract as described above shall be:
(i) entered into by the Asean Resources group in the ordinary and usual course of business;
(ii) either on normal commercial terms or, if there are not sufficient comparable transactions to judge whether they are on normal commercial terms, on terms no less favourable to Asean Resources than terms available to or from, as appropriate, independent third parties; and
(iii) entered into in accordance with the terms of the management contract;
the annual monetary amount guaranteed by Verywell in favour of Winsworld in accordance with the terms of the management contract shall be HK$78 million;
during the term of the management contract, the independent non-executive directors of Asean Resources shall review the transactions contemplated under the management contract annually and confirm in Asean Resources’ next and each successive annual report and accounts that the transactions contemplated under the management contract were conducted in the manner mentioned in paragraphs 1 and 2 above;

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LETTER FROM THE BOARD

the auditors of Asean Resources shall review the transactions contemplated under the management contract annually and confirm in a letter (the “letter”) to the board that:
(i) the transactions have been approved by the board;
(ii) the transactions have been entered into by the Asean Resources group in accordance with the terms of the management contract; and
(iii) the transactions have not exceeded the threshold mentioned in paragraph 2 above in that financial year;
details of the transactions described above in each financial year shall be disclosed as required under rule 14.25(1)(A) to (D) of the Listing Rules in the next and each successive annual report and accounts for that financial year; and
the management contract shall be approved by the Asean Resources shareholders, other than United Goal Development and Mr. Peter Chan and their respective associates and concert parties and other connected persons, as defined under the Listing Rules, in the special general meeting to be held on 5th May, 2003.

The directors shall promptly notify the Stock Exchange if they know or have reason to believe that the independent non-executive directors decline to conduct the review as required under paragraph 3 above or the auditors of Asean Resources are unable to provide the letter as required under paragraph 4 above.

If the transactions contemplated under the management contract in any relevant financial year exceeds the threshold mentioned in paragraph 2 above or fall after the financial year ending 31st March, 2006 or if the Asean Resources group enters into any new agreement with any connected persons as defined under the Listing Rules, Asean Resources will comply with the provisions of Chapter 14 of the Listing Rules governing connected transactions unless it applies for and obtains a separate waiver from the Stock Exchange.

Proposed new directors of Asean Resources

The board is currently made up of ten directors, comprising seven executive, one nonexecutive and two independent non-executive directors. Subject to the repayment by Mexan Group of the loan owing to United Goal Development in full under the loan facility agreement, all present executive directors will resign and new directors will be nominated by Mexan Group on the earliest date as permitted under the Takeovers Code. A further announcement will be made as and when there is a change in the composition of the board.

POSSIBLE VOLUNTARY OFFER FOR BESTEAM SHARES

The Besteam offer

Upon the implementation of the group reorganisation, United Goal Development will make or procure to make a voluntary offer to the Besteam shareholders to acquire all Besteam shares, other than those already owned by United Goal Development or parties acting in concert with it,

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LETTER FROM THE BOARD

on the terms to be set out in the offer document and the accompanying form of acceptance and transfer and on the following basis:

for each Besteam share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.1216 in cash

The Besteam shares to be acquired under the Besteam offer will be acquired with the right to receive all dividends and distributions declared, paid or made on or after the date of the acceptance of the Besteam offer and free from all third party rights attaching thereto on or after that date.

No transfer duty is payable on transfers of shares in companies incorporated in the British Virgin Islands whose shares are not listed on the Stock Exchange.

The offer price for the Besteam shares is determined after taking into account the unaudited pro forma adjusted net tangible asset value of Besteam and the closing price of the Asean Resources shares of HK$0.52 prior to the suspension of trading in the Asean Resources shares on 9th October, 2002. The total consideration of the Besteam offer based on the issued share capital of Besteam, upon completion of the group reorganisation, other than those Besteam shares already owned and, or agreed to be acquired by United Goal Development or parties acting in concert with it, amounts to approximately HK$40.2 million.

Closing of register of members

The register of members of Asean Resources will be closed from Tuesday, 29th April, 2003 to Monday, 5th May, 2003, both days inclusive. No transfer of Asean Resources shares will be registered during that period.

To qualify for the Besteam offer, an Asean Resources shareholder must:

be registered as a member of Asean Resources at the close of business on Monday, 5th May, 2003, being the record date; and
have an address which appears on the register of members of Asean Resources on the record date.

In order to be registered as a member of Asean Resources on the record date, Asean Resources shareholders must lodge transfers of the Asean Resources shares, with the relevant share certificates, with Asean Resources’ Hong Kong branch share registrars, Tengis Limited, at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong by 4:30 p.m. on Monday, 28th April, 2003.

It is expected that United Goal Development will despatch the Besteam offer document together with the accompanying form of acceptance and transfer for the Besteam shares to the Asean Resources shareholders who appear on the register of members on the record date within 7 days from the date of fulfillment of all conditions precedent of the Besteam offer as set out under the subsection headed “The conditions of the sale and purchase agreement”. It is currently intended that the Besteam offer will be open for acceptance from the date of despatch of the Besteam offer document which is expected to be Monday, 12th May, 2003 to Monday, 2nd June, 2003, both dates inclusive.

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LETTER FROM THE BOARD

It is the responsibility of the Asean Resources shareholders whose addresses as stated in the register of members of Asean Resources are outside Hong Kong at the close of business on the record date and who wish to accept the Besteam offer and take any action in relation thereto, to satisfy themselves as to the full observance of the laws of any relevant jurisdiction in connection therewith, including the obtaining of any governmental, exchange control or other consent which may be required to comply with other necessary formalities or legal requirements. Any such Asean Resources shareholders will be responsible for the payment of any transfer or other taxes by whomsoever payable due in respect of that jurisdiction and United Goal Development or any person acting on its behalf shall be entitled to be fully indemnified and held harmless by such Asean Resources shareholders for any such transfer or other taxes as such person may be required to pay.

The distribution of the Besteam shares to the Asean Resources shareholders who appear on the register of members on the record date is not transferable or capable of renunciation and there will be no trading in nil-paid entitlements on the Stock Exchange.

Certificates for the Besteam shares

Share certificates for the Besteam shares are expected to be despatched to the accepting qualifying Asean Resources shareholders by ordinary post at their own risk on or about 12th June, 2003.

Intentions of United Goal Development regarding Besteam

Besteam was established in 2002 and, upon implementation of the group reorganisation, its principal activity shall, through its subsidiaries and associated companies, include property investment, property development, securities investment, securities trading and investment in hotels which consist of investment holding of the interests of approximately 24.8% in JW Marriott Hotel Hong Kong in Admiralty, Hong Kong, approximately 47.7% in Hotel Nikko Hongkong in Tsimshatsui, Kowloon, Hong Kong, 57% in a residential redevelopment project at Nos. 33 and 35 Island Road, Hong Kong, 55% in the remaining unsold units of The Colonnade, a residential development at 152 Tai Hang Road, Hong Kong, various investment properties and properties held for or under development, being primarily holdings of agricultural land in the New Territories, Hong Kong for future realisation and will not conduct any business other than those currently conducted by Besteam and through its subsidiaries or hold assets other than these assets unless with the approval of the Besteam shareholders. Save for a joint venture development of an agricultural land in Fanling, the New Territories, Hong Kong which is expected to be funded by the joint venture partners, the development of other properties held for or under development will be funded by either Besteam or jointly with other joint venture partners.

It is intended that Besteam will manage its assets with the objective of realising them over the next several years when its directors consider the full underlying value of these assets can be obtained. The articles of association of Besteam provides, inter alia, that without the approval of the Besteam shareholders, other than United Goal Development and parties acting in concert with it, as defined in the articles of association of Besteam which definition is the same as defined in the Takeovers Code in any financial year, acquisition of assets will be limited to an aggregate value of no more than 10% of the gross value of the assets of the Besteam group as shown in its latest audited consolidated balance sheet or until such balance sheet is available, the unaudited pro forma statement of assets and liabilities of the Besteam group as contained in appendix III to this circular. Since the objective of Besteam is to realise its assets, there will not be any restriction on

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LETTER FROM THE BOARD

any disposal of assets. Further, all the net cash proceeds of realisations, other than such amounts needed for working capital purposes, which will be reviewed by Besteam’s auditors on an annual basis, will be returned to the Besteam shareholders through the repayment of capital or dividend distributions.

The articles of association of Besteam will contain provisions comparable to the Listing Rules requirements governing connected transactions so that transactions between Besteam or any of its subsidiaries and any of the directors of Besteam, its chief executive, United Goal Development and other substantial shareholders or an associate of any of them will be subject to independent shareholders’ approval who will be independently advised. No Besteam shares will be issued for cash unless first being offered to all Besteam shareholders in proportion to their respective shareholdings in Besteam. The ordinary remuneration of the directors of Besteam will from time to time be determined by the directors of Besteam, provided that the same shall be consistent with the level of remuneration paid to the directors of Asean Resources as described in its latest annual reports before the implementation of the group reorganisation and any material variation of such remuneration shall be subject to the approval by the Besteam shareholders, other than United Goal Development and parties acting in concert with it. The financial statements of Besteam will be prepared and audited in accordance with the accounting principles and auditing standards generally accepted in Hong Kong respectively. The auditors will be a certified public accountants. A copy of the audited accounts shall be sent to the Besteam shareholders within the time prescribed under the Listing Rules. Please refer to appendix VII to this circular for the summary of the articles of association of Besteam. In addition, Besteam will continue to be subject to the Takeovers Code for as long as it remains as an unlisted public company in Hong Kong.

No application will be made for the listing of the Besteam shares on any stock exchange. Although the Besteam shareholders will not be able to trade their shares on a recognised stock exchange, their interests could be safeguarded by the articles of association of Besteam which will contain provisions comparable to the rules relating to connected transactions as contained in the Listing Rules so that transactions between Besteam or any of its subsidiaries and the directors of Besteam, its chief executive, United Goal Development and other substantial shareholders or an associate of any of them will be subject to independent shareholders’ approval who will be independently advised.

The board of directors of Besteam will comprise all the present executive directors of Asean Resources.

Compulsory redemption

In the event that the Besteam offer results in United Goal Development and parties acting in concert with it acquiring 90% or more of the issued share capital of Besteam subject to the Besteam offer, United Goal Development will avail itself of the provisions of section 81 of the British Virgin Islands International Business Companies Act under which it can instruct Besteam to redeem the balance of its outstanding issued share capital. The redemption will be made at HK$0.1216 per Besteam share, being the same price as the offer price for the Besteam offer, and will be funded by an advance to Besteam by United Goal Development.

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LETTER FROM THE BOARD

THE EFFECTS OF THE ASEAN RESOURCES OFFER AND THE BESTEAM OFFER

The combined consideration per Asean Resources share under the Asean Resources offer and per Besteam share under the Besteam offer is HK$1.00 which represents:

a discount of approximately 61.1% on the audited consolidated net asset value of Asean Resources of HK$2.57 per Asean Resources share as at 31st March, 2002;
a premium of approximately 92.3% to the closing price of HK$0.52 per Asean Resources share as quoted on the Stock Exchange on 8th October, 2002, being the last trading day on which the Asean Resources shares were traded on the Stock Exchange prior to the suspension in trading of the Asean Resources shares;
a premium of approximately 92.3% to the weighted average closing price of approximately HK$0.52 per Asean Resources share as quoted on the Stock Exchange for the ten consecutive trading days up to and including 8th October, 2002;
a premium of approximately 92.3% to the weighted average closing price of approximately HK$0.52 per Asean Resources share as quoted on the Stock Exchange for the thirty trading days up to and including 8th October, 2002;
a premium of approximately 69.5% to the weighted average closing price of approximately HK$0.59 per Asean Resources share as quoted on the Stock Exchange for the 180 trading days up to and including 8th October, 2002; and
a premium of approximately 13.6% to the closing price of approximately HK$0.88 per Asean Resources share as quoted on the Stock Exchange as at the latest practicable date.

The consideration of approximately HK$0.8784 per Asean Resources share under the Asean Resources offer represents:

a discount of approximately 21.6% to the unaudited pro forma adjusted consolidated net tangible asset value of approximately HK$1.12 per Asean Resources share.

The consideration of approximately HK$0.1216 per Besteam share under the Besteam offer represents:

a discount of approximately 88.0% to the unaudited pro forma adjusted net tangible asset value of approximately HK$1.01 per Besteam share.

CANCELLATION OF THE ASEAN RESOURCES SHARE OPTIONS

As at 21st February, 2003, Asean Resources has granted a total of 104,200,000 share options to certain of its directors and full time employees, of which 79,682,000 share options have been granted to the directors of Asean Resources and 24,518,000 share options to other employees of Asean Resources, to subscribe for an aggregate of 104,200,000 Asean Resources shares, being the maximum number of shares in Asean Resources that could be subscribed for by exercising all the outstanding share options, at an exercise price of HK$0.68 per Asean Resources share, subject to adjustment. The cancellation of all outstanding share options granted to the optionholders is one of the conditions precedent to completion of the sale and purchase agreement. Should any of the

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LETTER FROM THE BOARD

optionholders exercise the share options, one of the conditions precedent to completion of the sale and purchase agreement cannot be fulfilled. Since there is no such clause relating to the cancellation of the share options under the share option scheme, approval of the independent shareholders of Asean Resources and consents of the optionholders will have to be sought for any cancellation of the share options.

Therefore, on 18th March, 2003, Asean Resources and the optionholders had entered into a share option agreement in relation to, inter alia, the cancellation of all the outstanding share options and the extension of the option period during which the optionholders are entitled to exercise the share options by six calendar months from 21st March, 2003, being the expiry date of all the outstanding share options, upon the terms and conditions therein contained. Under the terms of the share option agreement, the optionholders have agreed not to exercise the share options in order to facilitate the completion of the sale and purchase agreement and hence the Asean Resources offer. Save for the extension of the option period, the terms of the share option scheme remain unchanged. The board has agreed, subject to the approval of the independent shareholders of Asean Resources, to extend the option period and to pay a total cancellation fee of HK$0.32 per share option, being the difference between the aggregate offer price of HK$1.00 per share in Asean Resources and Besteam under the Asean Resources offer and the Besteam offer and the exercise price of the share option of HK$0.68 per Asean Resources share, or an aggregate amount of approximately HK$33 million to the optionholders from the internal resources of Asean Resources to cancel all the outstanding share options before the completion of the sale and purchase agreement.

The board considers that such cancellation arrangement is a fair and appropriate way to deal with any Takeovers Code implications on the outstanding share options arising from the sale and purchase agreement and such cancellation arrangement will be subject to the approval of the independent shareholders of Asean Resources and they will be advised by the independent board committee which will in turn be advised by Somerley. In the event that completion of the sale and purchase agreement does not take place and subject to the ratification of the share option agreement by the independent shareholders of Asean Resources, all the outstanding share options shall remain valid and exercisable at an exercise price to be adjusted in accordance with the terms of the share option scheme to reflect the cash dividend to be declared by Asean Resources and Besteam proposed to grant to the optionholders share options in Besteam on a one for one basis at an exercise price of HK$0.01 per Besteam share.

All the optionholders, United Goal Development and Mr. Peter Chan and their respective associates and concert parties, and other connected persons, as defined under the Listing Rules, will abstain from voting on the ordinary resolution numbered 3 to approve the share option agreement which sets out, amongst other things, the terms and conditions of the cancellation of the share options and the extension of the option period at the special general meeting.

GENERAL

Under the Listing Rules, the group reorganisation does not require the approval of the Asean Resources shareholders as the pro rata distribution of securities is exempted from the approval requirements of connected transactions. Notwithstanding this, an independent board committee has been formed to give advice to the independent shareholders of Asean Resources on how they should respond to the group reorganisation, the entering into of the management contract and the share option agreement which sets out, amongst other things, the terms and conditions of the cancellation of share options and the extension of the option period, and of the Asean Resources offer and the Besteam offer.

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LETTER FROM THE BOARD

Messrs. Chan Boon Ho, Peter, Cheng Kam Biu, Wilson, Lo Lin Shing, Simon and Lai Hing Chiu, Dominic are directors of United Goal Development. Messrs. Chan Chi On, Derek and To Hin Tsun, Gerald are directors of Tai Fook Securities Group Limited, of which Chow Tai Fook Enterprises Limited is a substantial shareholder. Chow Tai Fook Enterprises Limited is interested in 50% of the shareholdings in United Goal Development. Messrs. Wong Kam Cheong, Stanley and Lai Yu Ting are salaried directors of Asean Resources. Messrs. Lai Hing Chiu, Dominic and Ng Wai Hung are partners of the legal advisors to United Goal Development and Asean Resources. Therefore, the directors mentioned above are not considered to be sufficiently independent for the purpose of advising the independent shareholders of Asean Resources in respect of the transactions mentioned above. Accordingly, the independent board committee will only comprise Mr. Cheung Hon Kit, the remaining independent non-executive director, for the purpose of advising the independent shareholders of Asean Resources of the fairness and reasonableness of the transactions mentioned above.

Somerley has been retained as the independent financial advisor to advise the independent board committee.

It is noted that rule 8.2 of the Takeovers Code provides that an offer document should normally be posted by or on behalf of the purchaser within 21 days of the date of the joint announcement, being 21st February, 2003. Pursuant to note 2 to rule 8.2 of the Takeovers Code, the Executive’s consent is required if the making of the offer is subject to the prior fulfillment of pre-condition. United Goal Development and Mexan Group had made an application and the Executive had granted consent under rule 8.2 of the Takeovers Code to extend the deadline for the despatch of the composite offer documents time limit from within 21 days of the date of the joint announcement to 7 days from the date of fulfillment of all the conditions precedent of the Asean Resources offer and the Besteam offer as set out under the subsection headed “The conditions of the sale and purchase agreement”.

A composite offer document regarding the Asean Resources shares setting out the details of the Asean Resources offer and attaching therewith the acceptance and transfer forms and the opinion from the independent financial advisor on the Asean Resources offer is expected to be sent to all Asean Resources shareholders within 7 days from the date of fulfillment of all the conditions precedent of the Asean Resources offer.

Another composite offer document regarding the Besteam shares setting out the details of the Besteam offer and attaching therewith the acceptance and transfer forms and the opinion from the independent financial advisor on the Besteam offer is expected to be sent to all Besteam shareholders within 7 days from the date of fulfillment of all the conditions precedent of the Besteam offer.

SPECIAL GENERAL MEETING

The special general meeting is to be convened to consider the proposed transactions. A notice of the special general meeting is set out on pages 157 to 159 of this circular.

All the Asean Resources shareholders present in person or by attorney or by representatives or by proxy may vote on the special resolution numbered 1 regarding the amendments to the bye-laws.

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LETTER FROM THE BOARD

All the Asean Resources shareholders, other than United Goal Development and Mr. Peter Chan and each of their respective associates and concert parties, present in person or by attorney or by representatives or by proxy may vote on the special resolution numbered 2 relating to the group reorganisation.

All the Asean Resources shareholders, other than the optionholders, United Goal Development and Mr. Peter Chan and each of their respective associates and concert parties, and other connected persons, as defined under the Listing Rules, present in person or by attorney or by representatives or by proxy may vote on the ordinary resolution numbered 3 relating to the entering into of the management contract and the share option agreement by way of poll.

A form of proxy for use at the special general meeting is enclosed with this circular. Whether or not you are able to attend the meeting in person, you are requested to complete and return the relevant form of proxy in accordance with the instructions printed thereon and deposit with Asean Resources’ Hong Kong branch share registrars, Tengis Limited, at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong as soon as possible but in any event not later than forty-eight hours before the time appointed for the holding of the special general meeting or any adjournment thereof. Completion and return of the relevant form of proxy will not preclude the Asean Resources shareholders from attending and voting in person at the special general meeting or any adjournment thereof should they so wish and, in such event, the instrument appointing a proxy shall be deemed to be revoked.

RECOMMENDATION

The board believes that the resolutions to be proposed at the special general meeting are in the interests of Asean Resources and its shareholders as a whole and recommends all the independent shareholders of Asean Resources to vote in favour of the resolutions as set out in the notice of the special general meeting.

In addition, your attention is drawn to the letter from the independent board committee as set out on page 29 of this circular which contains its recommendation to the independent shareholders of Asean Resources, based on the advice from Somerley, in respect of the group reorganisation, the signing of the management contract and the share option agreement which sets out, amongst other things, the terms and conditions of the cancellation of the share options and the extension of the option period as well as the letter from Somerley as set out on pages 30 to 59 of this circular which contains its recommendation to the independent board committee and the principal factors and reasons taken into consideration.

ADDITIONAL INFORMATION

Your attention is drawn to the further information contained in the appendices to this circular and the notice of the special general meeting.

The Asean Resources and Besteam composite offer documents containing details of the Asean Resources offer and the Besteam offer respectively will be despatched within 7 days from the date of fulfillment of all the respective conditions precedent of the Asean Resources offer and the Besteam offer. In this regard, the independent board committee will give advice to the Asean Resources shareholders in connection with the Asean Resources offer and the Besteam offer.

Yours faithfully, for and on behalf of the board

Chan Boon Ho, Peter Chairman

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

ASEAN RESOURCES HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

10th April, 2003

To the independent shareholders of Asean Resources

Dear Sir or Madam,

GROUP REORGANISATION, AMENDMENTS TO THE BYE-LAWS, SIGNING OF THE MANAGEMENT CONTRACT (SPECIAL DEAL), CANCELLATION OF THE SHARE OPTIONS IN ASEAN RESOURCES AND EXTENSION OF THE OPTION PERIOD

I have been appointed as the sole member of the independent board committee to advise you in connection with the proposed transactions, details of which are set out in the letter from the board in the circular dated 10th April, 2003 (the “circular”), of which this letter forms part. The terms used in this letter shall have the same meanings as given to them in the circular unless the context otherwise requires.

Your attention is drawn to the “Letter from Somerley” concerning its advice to me regarding the proposed transactions as set out on pages 30 to 59 of the circular. Having considered the advice given in its letter, I am of the opinion that the terms of the proposed transactions are fair and reasonable so far as the independent shareholders of Asean Resources are concerned and that the proposed transactions are in the interests of Asean Resources and its shareholders as a whole. I, therefore, recommend the independent shareholders of Asean Resources to vote in favour of the special resolution numbered 2 and the ordinary resolution numbered 3 to be proposed at the special general meeting to approve the proposed transactions.

Yours faithfully,

for and on behalf of the independent board committee

Cheung Hon Kit

Independent non-executive director

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LETTER FROM SOMERLEY

Set out below is the text of a letter from Somerley to the independent board committee prepared for inclusion in this circular:

==> picture [33 x 34] intentionally omitted <==

Somerley Limited Suite 3108, One Exchange Square 8 Connaught Place Central Hong Kong

10th April, 2003

The Independent Board Committee Asean Resources Holdings Limited 39th Floor New World Tower 1 18 Queen’s Road Central Hong Kong

Dear Sir,

ASEAN RESOURCES GROUP REORGANISATION, MANAGEMENT CONTRACT RE ELIZABETH HOUSE (SPECIAL DEAL) AND THE SHARE OPTION AGREEMENT

INTRODUCTION

We refer to our appointment to advise the independent board committee in connection with the Asean Resources group reorganisation and the entering into of the management contract and the share option agreement (together the “Transactions”), details of which are contained in the circular to the shareholders and optionholders of Asean Resources dated 10th April, 2003 (the “Circular”), of which this letter forms a part. Unless otherwise defined, terms used in this letter shall have the same meanings as defined in the Circular.

Messrs. Chan Boon Ho, Peter, Cheng Kam Biu, Wilson, Lo Lin Shing, Simon and Lai Hing Chiu, Dominic are directors of United Goal Development. Messrs. Chan Chi On, Derek and To Hin Tsun, Gerald are directors of Tai Fook Securities Group Limited, of which Chow Tai Fook Enterprises Limited (a 50% shareholder of United Goal Development) is a substantial shareholder. Messrs. Wong Kam Cheong, Stanley and Lai Yu Ting are salaried directors of Asean Resources. Messrs. Lai Hing Chiu, Dominic and Ng Wai Hung are partners of the law firm which advises Asean Resources and United Goal Development on the Transactions. Accordingly, the remaining director, namely Mr. Cheung Hon Kit, has been appointed by the Board as the independent board committee to make a recommendation to the independent shareholders of Asean Resources (“Independent Shareholders”) regarding the Transactions. We have been appointed as independent financial advisor to advise the independent board committee in respect of the Transactions.

We are not connected with United Goal Development, Mexan Group or Asean Resources or their respective substantial shareholders or any party acting, or presumed to be acting, in concert with any of them and accordingly, are considered suitable to give independent advice on the

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LETTER FROM SOMERLEY

Transactions. Apart from normal professional fees payable to us in connection with this appointment, no arrangement exists whereby we will receive any fees or benefits from United Goal Development, Mexan Group or Asean Resources and their respective substantial shareholders or any party acting, or presumed to be acting, in concert with any of them.

In formulating our advice and recommendation, we have relied on the information and facts supplied, and the opinions expressed, by the directors of Asean Resources, which we have assumed to be true, accurate and complete. We have reviewed the published information on Asean Resources, including its audited financial statements for the two years ended 31st March, 2002 and its interim report for the six months ended 30th September, 2002. We have also reviewed the unaudited pro forma financial information of Asean Resources and Besteam assuming the Asean Resources group reorganisation is completed. We have discussed with DTZ the basis and assumptions for their valuation as at 31st January, 2003 of the Asean Resources group’s property interests which is contained in Appendices V and VI to the Circular. We have sought and received confirmation from the directors of Asean Resources that no material facts have been omitted from the information supplied and opinions expressed by them. We consider that the information which we have received is sufficient for us to reach our advice and recommendation as set out in this letter and to justify our relying on such information and we have no reason to doubt the truth and accuracy of the information provided to us or that any material facts have been omitted or withheld. We have, however, not conducted any independent investigation into the business and affairs of the Asean Resources group. We have also assumed that all representations contained or referred to in the Circular were true at the time were have made and will continue to be true up to the date of the special general meeting.

THE ASEAN RESOURCES GROUP REORGANISATION, ASEAN RESOURCES OFFER AND BESTEAM OFFER

The Asean Resources group reorganisation is referred to in the remainder of this letter as simply the “Reorganisation” unless the context would make this confusing.

Pursuant to the Reorganisation, the companies now making up the Asean Resources group will be split into a listed group and an unlisted group. The listed group will consist of the Asean Resources group’s interests in the commercial podium of Elizabeth House and certain borrowings and cash. The listed group will keep the name of Asean Resources Holdings Limited after the Reorganisation, but in the remainder of this letter it is also referred to in some contexts as “Elizabeth Asean” to help distinguish it from the Asean Resources group as presently constituted. The holding company for the unlisted group will be Besteam and all the other interests of the Asean Resources group, other than those to be held by Elizabeth Asean, will be grouped under Besteam. Following a cancellation of share premium of Asean Resources, Besteam will be spunoff to Asean Resources shareholders through a distribution in specie of all the issued shares of Besteam on a 1-for-1 basis.

(i) Elizabeth Asean

(a) Assets and business immediately after the Reorganisation

The 7-storey commercial podium of Elizabeth House, 250-254 Gloucester Road, Causeway Bay (“Elizabeth House”), together with the bank loans secured on Elizabeth House and other minor liabilities, and cash of at least HK$707.5 million (subject to adjustment – please refer to paragraph (3)(a)(ii) below for details), will be retained

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LETTER FROM SOMERLEY

under Elizabeth Asean. Rental income from Elizabeth House (including licence income from 177 car parks and signage rental) was about HK$6.68 million for the month of January 2003 (equivalent to approximately HK$80.16 million per year). On the basis set out on page 12 of the Circular, for the year ended 31st March, 2002, Elizabeth Asean would have made a pro forma profit attributable to shareholders of HK$47 million. On the basis set out in Appendix I (page 101) of the Circular, the unaudited pro forma adjusted consolidated net tangible assets of Elizabeth Asean would have been approximately HK$1,442 million (HK$1.12 per share). The Asean Resources shares will remain listed on the Stock Exchange.

(b) Asean Resources offer

The Reorganisation is a major, but not the only, condition of the sale and purchase agreement under which Mexan Group will gain control of Elizabeth Asean and be required to make or procure the Asean Resources offer. The terms of Asean Resources offer are as follows:

for each Asean Resources share . . . . . . . . . . . . . . . . . . . . . HK$0.8784 in cash.

Seller’s ad valorem stamp duty at a rate of HK$1 per HK$1,000 will be payable by accepting Asean Resources shareholders.

The conditions of the sale and purchase agreement, other than implementation of the Reorganisation in full, are:

The entering into of the management contract

Under the management contract, Verywell which will be a wholly owned subsidiary of Besteam will provide management services in respect of Elizabeth House for a term of 3 years commencing from the date of completion of the sale and purchase agreement. Pursuant to the management contract, Winsworld, a wholly owned subsidiary of Elizabeth Asean, will receive guaranteed receipts, net of expenses related to the management of the Elizabeth House, of HK$78 million (the “Guaranteed Net Rental Income”) per annum.

The management contract is a connected transaction under the Listing Rules and a special deal under the Takeovers Code and is therefore subject to approval by the Independent Shareholders and consent of the Executive. The management contract is discussed in more detail in section 4 below.

Cancellation of the outstanding share options

Asean Resources has granted share options to a number of its directors (as disclosed in Appendix VIII to the Circular) and full-time employees carrying rights to subscribe in aggregate for 104,200,000 Asean Resources shares. This represents approximately 8% of the about 1,286.5 million Asean Resources shares in issue as at the latest practicable date. The share option agreement includes a provision to cancel the share options for a cash payment of HK$0.32 per share option. This agreement is also subject to approval by the Independent Shareholders. Details are set out in section 5 below.

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LETTER FROM SOMERLEY

Continued listing

The Asean Resources shares will remain listed and traded on the Stock Exchange, save for any temporary suspension.

In the event that the Reorganisation is completed but the sale and purchase agreement does not proceed and consequently the Asean Resources offer does not become effective, the directors of Asean Resources propose to declare a cash dividend of not less than HK$650 million (approximately HK$0.5053 per Asean Resources share).

(c) The asset injection agreement

Pursuant to the sale and purchase agreement, Mexan Group has requested United Goal Development to procure Elizabeth Asean to enter into an asset injection agreement, for the purchase by Elizabeth Asean at a consideration of not more than HK$700 million of certain assets owned by Mexan Group or its associates. Details of the proposed asset injection are set out on pages 16-17 of the Circular. The asset injection agreement may or may not proceed as, inter alia, the Stock Exchange has not yet come to a final conclusion on whether Asean Resources will be treated as a new listing applicant following completion of such an agreement. At this stage, the asset injection agreement has not been signed. Neither the Reorganisation nor the Asean Resources offer is conditional on any such agreement being signed or implemented.

(ii) Besteam

Apart from the Elizabeth House, related liabilities and cash, all the other subsidiaries, associated companies, investments and assets/liabilities of Asean Resources will be transferred to Besteam, a wholly owned subsidiary of Asean Resources incorporated in the British Virgin Islands. Under a distribution in specie of the whole of the share capital of Besteam, Asean Resources shareholders will receive:

for each Asean Resources share . . . . . . . . . . . . . . . . . . . . . . . . . . one Besteam share.

The Besteam shares in issue will rank pari passu in all respects with each other. The entitlements to Besteam shares are not transferable or capable of renunciation and there will be no trading of entitlements to Besteam shares on the Stock Exchange.

The principal assets of Besteam upon completion of the Reorganisation will be:

hotel interests: an approximately 24.8% interest in JW Marriott Hotel Hong Kong in Admiralty and an approximately 47.7% interest in Hotel Nikko Hongkong in Tsim Sha Tsui East;
properties held for sale, which include a 55% investment in the six remaining unsold units of The Colonnade, 152 Tai Hang Road, Jardine’s Lookout, and rental properties located in Hong Kong and PRC; and

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properties held for or under development, which include a 57% interest in a garden house development project at Nos. 33 & 35 Island Road, Deep Water Bay and various holdings of agricultural land in the New Territories.

On the basis set out in Appendix III (page 108) to the Circular, the unaudited pro forma adjusted net tangible assets of Besteam would be approximately HK$1,298 million (HK$1.01 per Besteam share). On the basis set out on page 13 of the Circular, a pro forma loss attributable to shareholders of about HK$234 million (HK18 cents per Besteam share) would have been incurred for the year ended 31st March, 2002.

If the Reorganisation is completed, United Goal Development will make the Besteam offer, on the following terms:

for each Besteam share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.1216 in cash.

The Besteam offer will not be subject to any material conditions other than the implementation of the Reorganisation in full. No transfer duty is payable in respect of the Besteam offer.

(iii) Conditions of the Reorganisation

The main condition of the Reorganisation is approval by the Independent Shareholders by way of special resolution no. 2 set out in the notice of the special general meeting. Other conditions are compliance with the Companies Act 1981 of Bermuda and obtaining the necessary third parties’ consents, including consent from the Asean Resources group’s banks and joint venture partners, as required.

PRINCIPAL FACTORS TAKEN INTO ACCOUNT

In considering our advice to the independent board committee as regards the Transactions, we have taken the following principal factors into account:

1. Background to and reasons for the Transactions

Asean Resources is presently controlled by United Goal Development, which is itself controlled 50/50 by Mr. Peter Chan, the Chairman of Asean Resources, and Chow Tai Fook Enterprises Limited. On 20th December, 2002, United Goal Development entered into the sale and purchase agreement with Mexan Group to procure the sale of 955,970,289 Asean Resources shares (representing approximately 74.3% of the issued share capital) to Mexan Group for approximately HK$839.7 million (equivalent to HK$0.8784 per Asean Resources share), payable in cash. These are all the Asean Resources shares owned by United Goal Development and by Mr. Peter Chan personally. Completion of the sale and purchase agreement is subject to, inter alia, the completion of the Reorganisation.

The Reorganisation splits the Asean Resources group into two halves. The overall purpose is to reduce the discount to net assets at which Asean Resources has persistently traded (see below). The methodology is to package the most attractive property and the listing as “Elizabeth Asean” so that it can be sold to a third party. Elizabeth House, the prime asset of the Asean Resources group generating pro forma profits attributable to shareholders of HK$47 million for the financial year ended 31st March, 2002, will remain in Elizabeth Asean, together with cash of at

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least HK$707.5 million. The cash is approximately equal to the outstanding balance of bank mortgage on Elizabeth House which as at the date of the sale and purchase Agreement was HK$696.5 million, and will be adjusted downwards, in accordance with the sale and purchase agreement, to reflect any reduction in the mortgage at the time of completion of the said agreement. Hence, Elizabeth Asean will in effect initially be a listed holding company for a single major investment property, with a mortgage and an approximately equivalent amount of cash. The cash is not pledged to support the mortgage and could be used to make acquisitions. Upon completion of the Reorganisation, Besteam will hold the remaining assets which will be managed to return cash to the Besteam shareholders and Asean Resources shareholders will have the same interest in both companies as they now have in Asean Resources.

The great merit of Elizabeth Asean is simplicity. It is a very easy company to analyse and understand, holding one major property, and having a substantial net asset base and profitability. It is our understanding that Mexan Group sought a listed vehicle, but was not interested in the whole portfolio of assets of Asean Resources group. Consequently, it would not have been willing to acquire control of Asean Resources without the Reorganisation. Completion of Mexan Group’s purchase of control of Asean Resources will trigger an obligation to make an unconditional cash offer at HK$0.8784 per Asean Resources share, in which case Asean Resources shareholders should have the choice in due course of selling their shares at this price or remaining as shareholders. A price of HK$0.8784 per share of Elizabeth Asean significantly exceeds the weighted average closing price of approximately HK$0.59 per share for the whole of the Asean Resources group prevailing for the 180 trading days before the Transactions were announced.

The principle behind the Reorganisation is, in our opinion, a fair one as it addresses the problem of the persistent discount of over 80% to net assets at which Asean Resources shares traded over the material time (see paragraph 7(a) below) and leaves the Asean Resources shareholders with the same interest in Asean Resources’ assets as they have now, but packaged into shares of two companies rather than one. A question may be raised, however, as to whether it is reasonable for shareholders in a listed company to accept a proposal where about half of their net assets are held through an unlisted company.

There are of course important advantages in having a listing, in terms of both marketability of shares and investor protection through Stock Exchange regulations. As discussed in detail below, the articles of association of Besteam have been designed to afford considerable protection to the Besteam shareholders. Besteam will be, at least initially, a public company having over 50 shareholders, although an unlisted one, and United Goal Development has expressed its intention to exercise Compulsory Acquisition (as defined below) if acceptances of the Besteam offer amount to at least 90%. As long as it remains a public company, Besteam will be subject to the disciplines of the Takeovers Code. The articles of association of Besteam contain provisions concerning, inter alia, full distribution of surplus cash and limitations on acquisitions of new assets. Consequently, we consider there will be reasonable protections in place for the Besteam shareholders. However, Besteam as an unlisted company will no longer be subject to monitoring by a regulatory body in accordance with the regulatory rules then in place.

As regards marketability, the trading volume of Asean Resources shares has been low and the price, representing a large discount to net assets, has been unsatisfactory (for a more detailed discussion, see the paragraphs below headed “Share price and liquidity of Asean Resources shares” and “Net asset value”). In these circumstances, the ability to sell small quantities of shares at arguably unattractive prices may not be a great benefit to Asean Resources shareholders. A policy of managing an unlisted company to realise assets as soon as practicable and return cash to

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shareholders is, in our opinion, an acceptable alternative means of liquidity, taken in the context of the Reorganisation as a whole. Shareholders will also have the choice to exit from their Besteam shares through the Besteam offer. The Besteam offer will be made at HK$0.1216 per Besteam share, which represents a discount of approximately 88% to the pro forma net tangible asset per Besteam share of HK$1.01 and hence may not appear to be attractive to the Independent Shareholders unless they place a high priority on locking in an immediate profit over recent market prices. United Goal Development has expressed the intention to compulsorily acquire (“Compulsory Acquisition”) the remaining Besteam shares if valid acceptances of the Besteam offer are received in respect of 90% of the Besteam shares (approximately 297 million Besteam shares) held by Besteam’s independent shareholders, giving rise to the possibility that the Besteam shares held by some Independent Shareholders may be compulsorily acquired by United Goal Development if the latter is able to acquire at least 90% Besteam shares subject to the Besteam offer. In our opinion, the requirement to obtain 90% acceptance of the Besteam shares subject to the Besteam offer as a pre-requisite to the exercise of Compulsory Acquisition gives independent shareholders of Besteam as a whole sufficient power to decide whether to continue to hold their interests in Besteam.

2. Effects of the Reorganisation

If the Reorganisation becomes effective, Asean Resources shareholders will continue to hold their shares in Asean Resources (in its slimmed down Elizabeth Asean form) and in addition they will receive, free of charge through a distribution in specie, one Besteam share for every Asean Resources share held. The further effects will be:

As regards their “Elizabeth Asean” share
If the sale and purchase agreement is completed, they will individually be able to choose between:
- receiving HK$0.8784 per Asean Resources share in cash by accepting the Asean Resources offer; or
- remaining a shareholder of Elizabeth Asean.
If the sale and purchase agreement is not completed, they will:
- receive a dividend of at least HK$0.5053 per Asean Resources share in cash; and
- remain shareholders of Elizabeth Asean.
As regards their Besteam shares
As regards their Besteam shares, whether or not the sale and purchase agreement completes, they will individually be able to choose between:
- receiving HK$0.1216 per Besteam share in cash by accepting the Besteam offer; or
- remaining a shareholder of Besteam.

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Potential cash receipts of Independent Shareholders

	If the Asean	If the Asean
	Resources offer	Resources offer
	is made	is not made
	HK$ per share	HK$ per share
Cash in respect of Elizabeth Asean holdings	0.8784	* 0.5053	**
Cash in respect of Besteam holdings	0.1216	0.1216
Total potential cash receipts	1.0000	0.6269

Less seller’s ad valorem stamp duty.
** Following the proposed dividend of at least HK$650 million or HK$0.5053 per Asean Resources share, Asean Resources shareholders would still hold their shares, but in a more highly geared company, having significant bank borrowing secured on Elizabeth House and without material cash balances. The financial position of Elizabeth Asean in such circumstances is discussed in more detail in paragraph 3(a)(ii) headed “Unaudited pro forma adjusted consolidated net tangible assets” below.

The Asean Resources offer and the Besteam offer (together the “Proposed Offers”) are independent of each other. Independent Shareholders may choose to accept the Asean Resources offer and decline the Besteam offer or vice versa.

The aggregate cash consideration from accepting the Proposed Offers in respect of one Asean Resources share and one Besteam share (the “Aggregate Offer Price”) will be HK$1.00, which represents an approximately 92% premium to the quoted price of the Asean Resources shares of HK$0.52 per share on 8th October, 2002 (the “Last Trading Day”), being the last trading day on which the Asean Resources shares were traded prior to the announcement of the Reorganisation.

3. Financial and other information on Elizabeth Asean and Besteam

(a) Elizabeth Asean

(i) Issued share capital

Shares of HK$0.10 each (million) Held by controlling shareholder_(note)_ 956.0 Held by Independent Shareholders 330.5 Total issued share capital 1,286.5	% 74.3 25.7
	100.0

Note: either United Goal Development (as to 878,780,289 Asean Resources shares or approximately 68.3%)/Mr. Peter Chan (as to 77,190,000 Asean Resources shares or approximately 6.0%) or Mexan Group, depending on whether the sale and purchase agreement is completed.

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(ii) Unaudited pro forma adjusted consolidated net tangible assets (assuming completion of the Reorganisation)

If the sale and purchase agreement is completed, the unaudited pro forma adjusted consolidated net tangible assets will comprise:

Elizabeth House as valued by DTZ Cash_(Note 1) _Less: mortgage other net items Pro forma adjusted consolidated net tangible assets Gearing ratio_(Note 2) (Note 3)_	HK$ million Per share 1,530.0 707.5 2,237.5 (685.0) (110.2) 1,442.3 HK$1.12 48% Nil

Notes

Under the sale and purchase agreement, it was agreed that Elizabeth Asean would retain cash of at least HK$719 million, which amount is approximately equal to the outstanding balance of the mortgage on Elizabeth House of HK$696.5 as at the date of the sale and purchase agreement. The cash amount of HK$719 million will be adjusted downwards by the same amount as any reduction in the mortgage in accordance with the sale and purchase agreement. Since the date of the sale and purchase agreement, HK$11.5 million of the mortgage has been repaid, reducing the mortgage loan balance to HK$685 million. Accordingly, the cash remaining in Elizabeth Asean will be adjusted to HK$707.5 million and is still subject to further adjustment if additional mortgage repayments are made before completion of the sale and purchase agreement.
Calculated by dividing the mortgage of HK$685 million by the pro forma adjusted net tangible assets of HK$1,442 million.
If gearing is calculated by offsetting cash against the mortgage, as is sometimes done, gearing would be nil.

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If the sale and purchase agreement is not completed, the above unaudited pro forma adjusted net tangible assets would be adjusted for a reduction of cash to fund the proposed dividend and would comprise:

Elizabeth House as valued by DTZ Cash_(Note 1) _Less: mortgage loan other net items Pro forma adjusted consolidated net tangible assets Gearing ratio_(Note 2) (Note 3)_	HK$ million Per share 1,530.0 57.5 1,587.5 (685.0) (110.2) 792.3 HK$0.62 86% 79%

Notes:

Assuming a dividend of HK$650 million (approximately HK$0.5053 per share) is paid.
Calculated by dividing the mortgage of HK$685 million by net assets.
Calculated by dividing the mortgage net of cash by net assets of HK$792 million.

If the sale and purchase agreement is not completed and the cash dividend is paid, Elizabeth Asean would become a company with bank borrowings equal to approximately 86% of its pro forma adjusted net tangible assets, which would have been reduced to reflect the dividend. We consider this a relatively high, but manageable level of gearing in view of the valuation of Elizabeth House and the income being achieved exceeding current interest costs by a comfortable margin.

(iii) Pro forma profit (as set out on page 12 of the Circular)

	Year ended		Year ended
	31st March,	31st March,
	2002		2001
	HK$ million	HK$ million
Turnover_(Note 1)_	90.8		91.4

Profit before interest costs_(Note 2)_	76.3		77.4
Interest costs_(Note 4)_	(29.3)		(47.4)
Profit before taxation	47.0		30.0

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Notes

This represents the gross rental income.
After deducting, among others, the corporate and administrative expenses incurred by the listed group which include office rental, directors’ fees and listing fees.
Pursuant to the management contract, Winsworld will receive Guaranteed Net Rental Income of HK$78 million annually for the 3-year period after completion of the sale and purchase agreement. All expenses relating directly or indirectly to management of Elizabeth House will be borne by the Besteam group.
On completion of the sale and purchase agreement, Elizabeth Asean will have cash approximately equal to the borrowings, but would still incur interest costs if cash is not applied to repay the bank borrowings.

(iv) Management and future policy

If the sale and purchase agreement is completed, the present executive directors of Asean Resources will resign (subject to full repayment by Mexan Group of the loan owing to United Goal Development) on the earliest date permitted under the Takeovers Code. The day-to-day management of Elizabeth House will be the responsibility of the Besteam group under the management contract for a 3-year period. Other policies will be in the hands of the directors to be nominated by Mexan Group. If the sale and purchase agreement is not completed, the current directors will remain in place.

(v) Asean Resources offer

If the sale and purchase agreement is completed, Mexan Group will be required to make or procure an unconditional cash offer at HK$0.8784 per share. This represents a discount of approximately 22% to the pro forma adjusted net tangible assets per share of HK$1.12 of Elizabeth Asean as set out above but a premium of approximately 69% to the market price of Asean Resources of HK$0.52 per share on the Last Trading Day before the announcement of the Reorganisation. On the face of it, this offer may be reasonably attractive to Independent Shareholders, as the premium over past market price is substantial and the discount to net assets seems within an acceptable range. There is, however, no need for Independent Shareholders to take a view on whether to accept the offer now. An offer document containing full details of the Asean Resources offer will be published if the sale and purchase agreement is completed.

(vi) Asset injection

The future financial performance of Elizabeth Asean after the Asean Resources offer will also depend on whether the asset injection agreement materialises. Asean Resources may use up to HK$700 million of its retained cash to acquire assets from the beneficial shareholder of Mexan Group, as discussed on pages 16-17 of the Circular. Independent Shareholders should note that it is uncertain as to whether a proposal for the asset injection will or will not proceed. However, in the event that such a proposal proceeds, it will be subject, inter alia, to full disclosure through a circular to the Asean Resources shareholders and approval by them (other than Mexan Group and its associates).

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(b) Besteam

(i) Issued share capital

Shares of HK$0.01 each (million) To be held by United Goal Development and Mr. Peter Chan 956.0 To be held by the Independent Shareholders 330.5 Total issued share capital 1,286.5	% 74.3 25.7
	100.0

(ii) Unaudited pro forma adjusted net tangible assets

The following presentation is in a format we believe will be most helpful to the Independent Shareholders in understanding the position of Besteam as it will be immediately after the Reorganisation. It has been prepared on the following principal bases:

(1) the value of properties is based on the valuation as at 31st January, 2003 made by DTZ as set out in Appendix VI to the Circular (see the table below);
(2) the debt is drawn from the relevant bank debts used to compile the statement of indebtedness of the Asean Resources group set out in Appendix I to the Circular (see the table below); and
(3) other adjustments have been made to reconcile the pro forma net assets with the pro forma adjusted net tangible asset value of the Besteam group as set out in Appendix III to the Circular.

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Table

Note 1. Investment properties and properties held for sale – 6 small units of varying types – 6 units and 6 carparking spaces of The Colonnade, 152 Tai Hang Road, Jardine’s Lookout 1 2. Properties held for/under development through subsidiaries – 33 & 35 Island Road, Deep Water Bay 2 – Land in Yuen Long Total held in subsidiaries 3. Properties held for/under development through associates – Land in Sai Kung 3 – Land in Fanling 4 – 21 Luk Hop Street, San Po Kong 4. Hotel properties held through associates – Hotel Nikko Hongkong 5 – JW Marriott Hotel Hong Kong 5 Total held in associates Grand total	Attributable value of Valuation Attributable Properties at 31/1/03 interest at 31/1/03 HK$ million HK$ million 23.1 100% 23.1 113.0 55% 62.1 136.1 85.2 390.0 57% 222.3 8.0 100% 8.0 398.0 230.3 534.1 315.5	Attributable value of Valuation Attributable Properties at 31/1/03 interest at 31/1/03 HK$ million HK$ million 23.1 100% 23.1 113.0 55% 62.1 136.1 85.2 390.0 57% 222.3 8.0 100% 8.0 398.0 230.3 534.1 315.5	Bank debt at 31/1/03 HK$ million 6.5 64.4 70.9 138.3 – 138.3 209.2	Bank debt at 31/1/03 HK$ million 6.5 64.4 70.9 138.3 – 138.3 209.2
	179.0 14% 260.0 20% 14.0 50% 453.0 1,604.0 47.725% 2,700.0 24.817% 4,304.0 4,757.0 5,291.1	25.1 52.0 7.0 84.1 765.5 670.1 1,435.6 1,519.7 1,835.2		– – – – – – – – 209.2

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Notes

The six units of The Colonnade are completed properties and available for sale. The property is subject to mortgage, which outstanding balance as at 31st January, 2003 was approximately HK$64.4 million. Approximately HK$29 million (45%) of the mortgage was attributable to the minority shareholding. Such debt is expected to be repaid in mid2004. Under the terms of the mortgage, a minimum amount of the proceeds of sale of each unit will be paid to the bank and the remaining balance can be released to the Besteam group.
The Deep Water Bay development comprising 10 garden houses will be fully funded by bank finance and is under construction. Completion is scheduled by the end of 2003 and marketing is expected to begin in the second half of 2003.
Construction work for the Sai Kung property has not yet commenced since the basic terms and the amount of land premium in respect of the development have not been agreed with the government. Funding for the development has not been arranged.
There is no timetable for the Fanling development and no planning consent has been obtained. The joint venture partners will provide funding for the development.
The Asean Resources group’s interests in Hotel Nikko Hongkong and JW Marriott Hotel Hong Kong are held through New Unity Holdings Ltd., a company owned 50/50 by Asean Resources group and an independent third party. There are minority interests in the hotel owning group and both hotel owning companies have bank borrowings, being about HK$1 billion in respect of the JW Marriott Hotel Hong Kong and about HK$0.5 billion in respect of Hotel Nikko Hongkong.

On the above bases, the pro forma adjusted net tangible assets of the Besteam group may be summarised as follows:

HK$ million
Total properties held in subsidiaries
534.1
Less:_related borrowings
(209.2)
Properties held through associates
(attributable interest)
Hotel properties held through
associates (attributable interest)
_Less: related debt attributable to
minority shareholding
29.0
(see Note (1) above)
minority interests of properties
held in subsidiaries
(218.6)
other net items
(357.2)
Pro forma adjusted net assets
(per share, assuming 1,286,482,836
Besteam shares are in issue)

HK$ million
324.9
84.1
1,435.6
(546.8)
1,297.8
HK$1.01

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(iii) Pro forma loss (as set out on page 13 of the Circular)

The pro forma combined profit and loss accounts of Besteam indicate that Besteam would have made losses for the two financial years ended 31st March, 2002. The following financial data is extracted from the pro forma accounts:

	Years ended	31st March,
	2002	2001
	HK$’000	HK$’000
Turnover	528,769	595,385
(Loss)/profit from operations	(215,889)	130,688
Write down in value of listed securities	Nil	(333,670)
Loss attributable to shareholders	(234,001)	(307,382)

Based on the above figures, Besteam seems unlikely to achieve material profits in the near future. This may not matter greatly in an unlisted company being managed to realise assets provided that Besteam can finance its operations. Besteam has, in our opinion, a reasonably strong balance sheet, with moderate debt and substantial net assets. Besteam should not therefore be under financial or time pressure to sell assets quickly at low prices. Consents from partners would be required before any sale of assets held through joint ventures or associated companies could be made.

(iv) Management and future policy

The board of directors of Besteam will comprise all the present executive directors of Asean Resources. Besteam will not conduct any business other than businesses currently conducted by the subsidiaries of Asean Resources which will become subsidiaries of Besteam.

It is intended that Besteam will manage its assets with the objective of realising them over the next several years when its directors consider that reasonable prices for these assets can be obtained. This should be relatively straightforward in the case of properties held by subsidiaries valued at HK$534 million as set out above. Almost all the related debt of HK$209 million is secured on six units of The Colonnade and ten garden houses being built in Deep Water Bay. The arrangement in the case of the mortgage on The Colonnade is broadly that the sales proceeds of each unit up to a certain amount must be utilised to repay debt and the balance is released to the Besteam group and would be available for working capital and payment of dividends. As for the mortgage on the Deep Water Bay development, the sales proceeds have to be applied to repay the mortgage first.

Development projects will tend to absorb cash in the first instance. Except for a subsidiary’s development project in Deep Water Bay which is covered by building mortgages (which outstanding sum as at 31st January, 2003 was approximately HK$138 million) and is expected to be completed by the end of 2003, other developments are held through associated companies and have no firm timetable at this stage. The development project at Fanling, if it proceeds, is expected to be funded by the other joint venture partners. Besteam will have to make arrangements in due course to finance the other development projects with the other joint venture partners on a pro rata basis.

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According to the audited consolidated accounts of the Asean Resources group, the respective profit contribution of the hotel division for the two financial years ended 31st March, 2002 was approximately HK$30 million and approximately HK$33 million respectively. However, this division has been facing pressure on its profit margins, due primarily to the keen competition in hotel room rates and food and beverage charges. The occupancy rate shows improvement due mainly to the relaxation of quotas for tourists from mainland China. No dividends have yet been paid to the Asean Resources group by the holding companies of these hotels, which have, inter alia, bank debts of approximately HK$1.5 billion of their own to service.

Consequently, despite the intention to distribute surplus cash in due course, we consider it may be no earlier than end-2004 before significant amounts can be distributed to the Besteam shareholders, principally from sales of properties owned or being developed by the subsidiaries. Nevertheless, having considered the current valuation and the level of bank loans, we consider that Besteam’s asset base is sound and substantial, and should prove capable of generating significant distributions for the Besteam shareholders in due course, particularly from the hotel property interests.

(v) Risk factors

No application will be made for the listing of the Besteam shares. In our opinion, given the track record of Besteam and the restriction on making significant acquisitions (see below) and the declared policy, in effect, to liquidate Besteam in a controlled way, no such application would be appropriate or have any realistic chance of success. Consequently, the Besteam shareholders will not be able to trade their shares on a recognised stock exchange.

In addition, the Besteam shareholders will not be able to enjoy the protections presently afforded by the Listing Rules and the terms of the Listing Agreement.

We have carefully considered the disadvantages for the Besteam shareholders in terms of marketability and corporate governance because of the lack of listing status. Bearing in mind the protections summarised below, we believe Besteam will prove an acceptable investment vehicle for the independent shareholders of Besteam.

(vi) Protections for the Besteam shareholders

The articles of association of Besteam will contain provisions (see Appendix VII to the Circular for a summary) in respect of the following:

without the approval of the shareholders of Besteam (other than United Goal Development and its concert parties), acquisitions of assets in any financial year will be limited to an aggregate value of no more than 10% of the gross value of the assets of the Besteam group as shown in its latest audited consolidated balance sheet or, until such balance sheet is available, in the unaudited pro forma statement of assets and liabilities of the Besteam group as contained in Appendix III to the Circular. Since the objective of Besteam is to realise its assets, there will be no restrictions on disposals (except to connected parties – see below);

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it is intended that all the net cash proceeds of realisations, other than such amounts needed for working capital purposes (which will be reviewed by Besteam’s auditors on an annual basis), will be returned to the Besteam shareholders through the repayment of capital or dividend distributions;
there will be provisions comparable to the Listing Rules requirements governing connected transactions so that transactions between Besteam or any of its subsidiaries and the directors of Besteam, its chief executive, United Goal Development and the other substantial shareholders or parties associated with any of them will be subject to independent shareholders’ approval who will be independently advised;
no shares of Besteam will be issued for cash unless they are first offered to all Besteam shareholders in proportion to their respective shareholdings in Besteam;

– directors remuneration will be consistent with the level of remuneration paid to directors of Asean Resources as shown in the latest annual reports of Asean Resources before the implementation of the Reoganisation, and any material variation in such remuneration will be subject to approval by the Besteam shareholders, other than United Goal Development and its concert parties;

the financial statements of Besteam will be prepared and audited in accordance with the accounting principles and auditing standards respectively generally accepted in Hong Kong. The auditors will be a certified public accountant. Audited accounts will be despatched to the Besteam shareholders within the time limit as prescribed under the Listing Rules from time to time.

Besteam will continue to be subject to the Takeovers Code for as long as it remains as an unlisted public company in Hong Kong.

(vii) The Besteam offer

Upon the completion of the Reorganisation, United Goal Development will become the controlling shareholder of Besteam. United Goal Development will make an unconditional offer to acquire the Besteam shares from the independent shareholders of Besteam at cash consideration of HK$0.1216 per Besteam share. This represents a discount of approximately 88% to the pro forma net tangible assets per Besteam share of HK$1.01 as set out above and may not, on the face of it, appear to be likely to be attractive to the independent shareholders of Besteam unless they place a high priority on locking in an immediate profit over recent market prices. There is however no need for the independent shareholders of Besteam to take a view on whether to accept the offer now. An offer document containing full details of the Besteam offer will be sent to the Besteam shareholders in due course if the Reorganisation is completed.

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4. Management contract

Asean Resources’ interests in Elizabeth House are held through a wholly owned subsidiary, Winsworld. Pursuant to the management contract to be entered into between Winsworld, Verywell and Mr. Peter Chan (as guarantor of Verywell), Winsworld will engage Verywell to manage Elizabeth House for a term of 3 years from the date of completion of the sale and purchase agreement.

Pursuant to the management contract, Verywell will guarantee in favour of Winsworld that the Guaranteed Net Rental Income of Winsworld will, for each of the three years covered by the management contract, not be less than HK$78 million. For the purpose of the management contract, the Guaranteed Net Rental Income shall mean all rents, licence fees and other income derived and received from or in connection with Elizabeth House, net of all outgoings directly and indirectly related to the management of Elizabeth House. If the Guaranteed Net Rental Income is more than HK$78 million, any excess will be retained by Verywell. On the other hand, Verywell is obliged under the management contract to pay Winsworld the Guaranteed Net Rental Income of HK$78 million per annum, irrespective of the actual rental receivables from tenants of Elizabeth House and any bad debts for those receivables.

Upon completion of the Reorganisation, Verywell, now a wholly owned subsidiary of Asean Resources, will become wholly owned by Besteam. Besteam will then be controlled by United Goal Development and Mr. Peter Chan, the existing controlling shareholders of Asean Resources. Mr. Peter Chan is also the Chairman of Asean Resources. The management contract is therefore deemed to constitute a connected transaction under the Listing Rules and a special deal under the Takeovers Code. Approval of the Independent Shareholders and consent from the Executive are therefore required.

Elizabeth House has been managed by Verywell since 1998 and the existing management and employees of Verywell will be transferred to Besteam following completion of the Reorganisation. Mexan Group will be initially unfamiliar with the tenancy and other detailed arrangements relating to Elizabeth House. Accordingly, we consider it will be administratively efficient and commercially reasonable for Asean Resources to enter into the management contract and continue the service of Verywell as the managing agent of Elizabeth House. In addition, the entering into of the management contract is in the interest of Elizabeth Asean as it provides guaranteed revenue from its major asset over the 3-year term covered by the management contract.

The directors of Asean Resources have confirmed that the Guaranteed Net Rental Income of HK$78 million has been determined after taking into account the terms of the existing tenancies, the outgoing expenses, the occupancy rate and the estimated future outlook of the rental market. According to the unaudited pro forma combined profit and loss account of Asean Resources as set out in the letter from the board in the Circular, the pro forma profits from operations, which essentially reflected the profits from Elizabeth House, for the financial years ended 31st March, 2002 and 31st March, 2001 were approximately HK$76 million and HK$77 million respectively. However, Asean Resources shareholders should note that the pro forma profits from operations for the past years are not directly comparable to the Guaranteed Net Rental Income as the pro forma profits are arrived at after netting off the corporate and administrative expenses incurred by Asean Resources as a listed company. In the circumstances, it may be more meaningful to refer to the current monthly rental of Elizabeth House as set out in the property valuation on Appendix V to the Circular, which sum was approximately HK$6.68 million for the month of January 2003, with annual rental grossed up to approximately HK$80.16 million. This sum has not yet taken into account the bad debts for rental receivables and expenses incurred for the management of Elizabeth

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House, including those incurred in property maintenance. Verywell has principally financed the maintenance of Elizabeth House by management fee received from the tenants. The occupancy rate is currently approximately 81%, which is at the low end as compared to the average occupancy rate of approximately 97% for the financial year ended 31st March, 2002. We understand from the management that this is the result of the general economic downturn which has particularly affected companies in the food and entertainment industry, the major tenants of Elizabeth House. We have also discussed with the independent valuer and agree with them that the rental market for Elizabeth House is likely to remain stable, while the prospect for reversions at Elizabeth House on renewals of tenancies is not positive, given the prevailing contraction in retail spending and the uncertain economic outlook. Consequently, we believe the effect of the management contract in practical terms on the shareholders of Asean Resources and Besteam is not likely to be material and that the HK$78 million annual Guaranteed Net Rental Income is a reasonable sum so far as the Independent Shareholders are concerned.

Under the management contract, Verywell will provide management services to Winsworld throughout the 3-year term covered by the management contract. The directors of Asean Resources consider that it would not be practicable to make disclosure of such transactions on each occasion when they arise. Accordingly, Asean Resources has applied to and obtained from the Stock Exchange a waiver (the “Waiver”) from strict compliance with rule 14.26 of the Listing Rules, subject to the terms and conditions, including annual review of the transactions to be made under the management contract by the independent non-executive directors and auditors of Elizabeth Asean, as set out under the paragraph headed “Continuing connected transaction” in the letter from the board of this Circular. In our view, the terms and conditions for the Waiver should ensure that the transactions to be made under the management contract are entered into in accordance with the terms of the management contract, thereby safeguarding the interests of the Independent Shareholders as a whole. On this basis, we consider that the grant of the Waiver is in the interest of Elizabeth Asean and the Independent Shareholders as a whole.

5. The share option agreement

The sale and purchase agreement is conditional on the cancellation of all outstanding Asean Resources share options. Options in respect of 104,200,000 Asean Resources shares have been granted to the directors and full time employees of Asean Resources and are still outstanding. The outstanding share options are exercisable at a price of HK$0.68 per Asean Resources share (subject to adjustment) and were due to expire on 21st March, 2003. In consideration for the optionholders agreeing not to exercise the share options between the date of the sale and purchase agreement and 21st March, 2003, Asean Resources has agreed, subject to ratification by the Independent Shareholders, to extend the expiry date by six months to 21st September, 2003 in view of the prolonged timetable for the Reorganisation and the Proposed Offers.

Optionholders will, subject to the approval of the Independent Shareholders, receive HK$0.32 per share option under the terms of the share option agreement. The price of HK$0.32 equals the “see through” value of the share option, i.e. the Aggregate Offer Price (being HK$1), less the unit exercise price of HK$0.68 of the share options. The aggregate cancellation fee of approximately HK$33 million will be funded by internal resources of Asean Resources, as part of the overall package of commercial terms agreed between United Goal Development and Mexan Group which include the making of the Asean Resources offer. We believe, for the reasons discussed under the paragraph headed “Asean Resources offer”, that the opportunity to receive the Asean Resources offer is in the interests of Asean Resources shareholders. Consequently, we consider it reasonable for Asean Resources to agree to fund the cancellation fee to enable its shareholders to receive the benefit of the Asean Resources offer.

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LETTER FROM SOMERLEY

In the event that the sale and purchase agreement is not completed, the share options will not be cancelled, but the exercise price of the share options will be adjusted in accordance with the share option scheme. The exercise price for the share options will be adjusted downwards from HK$0.6800 to HK$0.1647 per Asean Resources share, after taking into account the cash dividend of HK$0.5053 and the exercise price of HK$0.01 of the Besteam options. It is also proposed that the optionholders will receive, in addition to their current holding of share options, an equivalent number of options exerciseable into Besteam shares (“Besteam options”). The Besteam options will be exercisable at HK$0.0100 per Besteam share and will be subject to a cancellation proposal (also on a “see through” basis) to be made by United Goal Development at HK$0.1116 per Besteam option at the same time as it extends the Besteam offer. The optionholders have undertaken to accept such proposal under the share option agreement.

In consideration for the optionholders agreeing not to exercise the share options, Asean Resources has agreed to extend the original expiry date of the share options from 21st March, 2003 for six months to 21st September, 2003 and is seeking the Independent Shareholders’ ratification for the extension. The extension will allow the share option agreement to be considered on the same timetable as the remainder of the Transactions. If the extension is not ratified by the Independent Shareholders, the share options will lapse. The Reorganisation is not conditional on the extension of the expiry date of the share options. Completion of the sale and purchase agreement (and therefore of the making of the Asean Resources offer) is conditional on the cancellation of the share options. It appears to us that if the extension is not approved, the share options, while not cancelled, would have expired. It may be argued that the effect of expiry of the share options might amount to the fulfillment of the condition in the sale and purchase agreement that the share options be cancelled. However, Asean Resources has been unable to obtain legal confirmation that there would be no risk of non-fulfillment of the condition if the share options expired rather than be cancelled.

6. Share price and liquidity of Asean Resources shares

(a) Historical market price

The following chart shows the historical price performance of the Asean Resources shares for 24 months preceding the Last Trading Day and up to and including the latest practicable date:

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LETTER FROM SOMERLEY

Closing price of Asean Resource shares for 24 months preceding the Last Trading Day up to and including the latest practicable date

==> picture [388 x 236] intentionally omitted <==

----- Start of picture text -----

Aggregate Offer Price HK$1.00
HK$ 1.1
1.0
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
9/10/2000 10/1/2000 11/1/2000 12/1/2000 1/1/2001 2/1/2001 3/1/2001 4/1/2001 5/1/2001 6/1/2001 7/1/2001 8/1/2001 9/1/2001 10/1/2001 11/1/2001 12/1/2001 1/1/2002 2/1/2002 3/1/2002 4/1/2002 5/1/2002 6/1/2002 7/1/2002 8/1/2002 9/1/2002 10/1/2002 11/1/2002 12/1/2002 1/1/2003 2/1/2003 3/1/2003 4/7/2003
----- End of picture text -----

Source: Bloomberg

As shown in the above chart, the price of Asean Resources shares fluctuated within the range of HK$0.60 and HK$0.70 during early October 2000 to mid March 2001. The share price dropped sharply in late March 2001 to below HK$0.60 until early June 2001. In early June 2001, the price began to rebound and reached HK$0.95 on 2nd August, 2001 but did not hold at this level and closed at HK$0.54 on 8th October, 2001. Between then and the Last Trading Day, the share price traded in the region of HK$0.52 to HK$0.67, closing below HK$0.60 on most of the trading days.

Trading in the Asean Resources shares was suspended from 9th October, 2002 pending publication of the announcement regarding the Transactions on 24th February, 2003 (the “Announcement”). After publication of the Announcement, the share price rose to HK$0.88 and has remained at about that price since then.

As shown in the above chart, prior to suspension of trading of Asean Resources shares on the Last Trading Day, the share price of Asean Resources traded below the Aggregate Offer Price over the entire period under review. The Asean Resources share price rose by about 69% from HK$0.52 to HK$0.88 on 8th February, 2003, the date the Announcement was released and closed at HK$0.88 as at the latest practicable date.

We believe the surge in the share price after the Announcement was mainly due to the possible Reorganisation and the expectation of the Proposed Offers being made. If so, it is unlikely that the share price will hold at the current level if the Reorganisation, which facilitates the Asean Resources offer (or the possible cash distribution) and will result in the Besteam offer, does not go through. Given the above, we are of the opinion that the proposal for the Reorganisation has created for the Independent Shareholders an opportunity to realise their investment at a much more favourable price than has recently been available through the market.

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LETTER FROM SOMERLEY

If the Proposed Offers proceed, the Aggregate Offer Price of HK$1.00 will represent:

a premium of approximately 92.3% to the closing price of HK$0.52 per Asean Resources share as quoted on the Stock Exchange on the Last Trading Day;
a premium of approximately 92.3% to the weighted average closing price of approximately HK$0.52 per Asean Resources share as quoted on the Stock Exchange for the thirty trading day period up to and including the Last Trading Day;
a premium of approximately 69.5% to the weighted average closing price of approximately HK$0.59 per Asean Resources share as quoted on the Stock Exchange for 180 trading days up to and including the Last Trading Day; and
a premium of approximately 13.6% to the closing price of HK$0.88 per Asean Resources share as quoted on the Stock Exchange on the latest practicable date.

The weighted average closing prices above are calculated based on the daily closing prices as weighted by the trading volume of the day.

Shareholders should note that the Asean Resources offer at HK$0.8784 per share will only proceed upon completion of the sale and purchase agreement. If the sale and purchase agreement does not proceed, Independent Shareholders will receive a HK$0.5053 per share cash dividend and still hold shares in Elizabeth Asean. We do not consider it a correct basis to compare the aggregate cash dividend of HK$0.5053 and the Besteam offer price of HK$0.1216 against the market price of the Asean Resources shares, without taking into account some value for the shares of Elizabeth Asean ex the cash dividend of HK$0.5053 per share. The market value of the shares of Elizabeth Asean ex dividend is not known at the moment. In our opinion, it is appropriate to start from the value of the Asean Resources offer in making an estimate of the value of the Elizabeth Asean shares ex dividend, i.e. such shares might have a market price of say approximately up to HK$0.3731 per share (being the Asean Resources offer price of HK$0.8784 per share less the cash dividend of HK$0.5053 per share). Consequently, a comparison of the Aggregate Offer Price of HK$1.00 against the market price of Asean Resources is, in our view, the most helpful basis of comparison for shareholders.

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LETTER FROM SOMERLEY

(b) Liquidity

The following chart shows the daily trading volume of the Asean Resources shares for the 24 months preceding the Last Trading Day up to and including the latest practicable date:

==> picture [406 x 247] intentionally omitted <==

----- Start of picture text -----

Million
9
8
7
6
5
4
3
2
1
0
10/9/2000 11/1/2000 12/1/2000 1/1/2001 2/1/2001 3/1/2001 4/1/2001 5/1/2001 6/1/2001 7/1/2001 8/1/2001 9/1/2001 10/1/2001 11/1/2001 12/1/2001 1/1/2002 2/1/2002 3/1/2002 4/1/2002 5/1/2002 6/1/2002 7/1/2002 8/1/2002 9/1/2002 10/1/2002 11/1/2002 12/1/2002 1/1/2003 2/1/2003 3/1/2003 4/7/2003
----- End of picture text -----

Source: Bloomberg

As shown in the above chart, the trading of the Asean Resources shares has been very thin during the period under review and on many trading days was nil. Trading was suspended for a prolonged period (from 8th October, 2002 to 23rd February, 2003) pending the release of the Announcement. The surge in volume during the end of the period under review was, in our view, due to the release of the Announcement.

The following sets out in table form the total number of Asean Resources shares traded per month, the percentage of the monthly trading volume to the issued share capital of Asean Resources and the percentage of the monthly trading volume to Asean Resources

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LETTER FROM SOMERLEY

shares held by the public respectively for the period commencing from 24 months preceding the Last Trading Day up to and including the latest practicable date:

	Monthly trading	Monthly trading	Monthly trading
	volume of	volume to total		Monthly trading
	Asean Resources	Asean Resources		volume to
	shares	shares in issue		public float
			(Note 1)	(Note 2)
			%	%
9th October, 2000 to
31st October, 2000	1,826,961		0.142	0.555
November 2000	2,084,054		0.162	0.633
December 2000	1,126,988		0.088	0.342
January 2001	1,189,600		0.092	0.361
February 2001	1,899,376		0.148	0.577
March 2001	7,348,000		0.571	2.231
April 2001	57,086		0.004	0.017
May 2001	480,932		0.037	0.146
June 2001	3,967,181		0.308	1.204
July 2001	3,574,815		0.278	1.085
August 2001	8,840,566		0.687	2.684
September 2001	1,350,986		0.105	0.410
October 2001	100,000		0.008	0.030
November 2001	345,720		0.027	0.105
December 2001	801,853		0.062	0.243
January 2002	336,401		0.026	0.102
February 2002	1,870,642		0.145	0.568
March 2002	573,964		0.045	0.174
April 2002	1,417,308		0.110	0.430
May 2002	2,208,151		0.172	0.670
June 2002	408,830		0.032	0.124
July 2002	863,798		0.067	0.262
August 2002	1,717,582		0.134	0.521
September 2002	290,351		0.023	0.088
October 2002	260,000		0.020	0.079
November 2002	0	(Note 3)	0.000	0.000
December 2002	0	(Note 3)	0.000	0.000
January 2003	0	(Note 3)	0.000	0.000
February 2003	12,297,656		0.956	3.733
March 2003	7,851,983		0.610	2.384
1st April, 2003 to
latest practicable date	1,117,348		0.087	0.339

Notes

(1) Based on 1,286,482,836 Asean Resources shares in issue.

(2) Based on a public float of 329,400,977 Asean Resources shares.
(3) Trading of Asean Resources shares was suspended from 8th October, 2002 to 23rd February, 2003 and resumed on 24th February, 2003.

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LETTER FROM SOMERLEY

The monthly trading volume of Asean Resources shares during the 24 months preceding the Last Trading Day was thin. The volume of Asean Resources shares traded during that period represented between 0.008% and 0.687% of the total Asean Resources shares in issue and between 0.017% and 2.684% of the Asean Resources shares in public hands. After trading resumed on 24th February, 2003, the total number of Asean Resources shares traded in February 2003 increased to approximately 12.3 million, representing 0.956% of total shares in issue and 3.733% of the Asean Resources shares in public hands. We believe that if the Transactions are not completed, the trading volume of Asean Resources shares is likely to return to the low levels experienced prior to the release of the Announcement. Based on the above, in our opinion, the Asean Resources shares are normally relatively illiquid and it is unlikely that the Independent Shareholders as a body could sell significant numbers of their Asean Resources shares in the market or at all, or without causing downward pressure on their market price.

In view of the persistently low liquidity of the Asean Resources shares, we are of the opinion that the Reorganisation, which facilitates the Asean Resources offer (or the possible cash distribution) and will result in the Besteam offer, provides the Independent Shareholders with an assured opportunity to realise their investment in Asean Resources (or a substantial proportion of it) on advantageous terms.

7. Net asset value

The latest published unaudited net asset value per Asean Resources share, which represents the aggregation of the Elizabeth Asean per share net assets and the Besteam per share net assets, was HK$2.59 as at 30th September, 2002. The Aggregate Offer Price of HK$1.00 represents a discount of approximately 61.4% to the Asean Resources’s latest published unaudited net asset value per share as at 30th September, 2002. For the reasons set out under the second last paragraph headed “Historical market price” on page 49 of this letter, in the paragraphs below we refer to the Aggregate Offer Price for comparison purpose, though shareholders should note that the Asean Resources offer will only proceed upon completion of the sale and purchase agreement.

(a) Historical discount of market price to net asset value

As with other property companies in Hong Kong, Asean Resources shares have traded at a significant discount to the net asset value. We have reviewed the closing price of Asean Resources shares and compared it against the then latest published consolidated net asset value of the Asean Resources shares, which we have assumed was generally available to the market from the date of publication of Asean Resources’ full year or interim results announcement. Based on the schedule below, the Asean Resources shares have traded at

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LETTER FROM SOMERLEY

above 80% discount to their underlying net asset value for most of the time during the period under review, as set out in the table below:

	Published
	consolidated
	net asset value	Closing price
	per Asean	per Asean		Discount to
	Resources	Resources share		net asset value
Period	share	High	Low	Lowest	Highest
	(HK$)	(HK$)	(HK$)	%		%
09/10/2000-17/12/2000	3.23	0.70	0.59	78.33		81.73
*18/12/2000-18/07/2001	3.24	0.92	0.51	71.60		84.26
*19/07/2001-16/12/2001	2.79	0.95	0.54	65.95		80.65
*17/12/2001-16/07/2002	2.80	0.67	0.52	76.07		81.43
*17/07/2002-08/10/2002	2.57	0.56	0.51	78.21		80.16

* Date when Asean Resources published its final or interim results announcement

As compared to the above discounts, the Aggregate Offer Price of HK$1 per share represents a significantly lower discount of 61.4% to Asean Resources’ latest published unaudited net asset value of HK$2.59 per Asean Resources share as at 30th September, 2002.

(b) Discount of market price to net asset value of comparable listed companies

We have identified five property companies listed on the Stock Exchange which are principally engaged in property development and investment in Hong Kong and have market capitalization between HK$839.8 million to HK$1,741.6 million as at the latest practicable date.

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LETTER FROM SOMERLEY

The schedule below shows the percentage of discount of market price to net asset value of the selected comparable property companies:

		Closing
		share price	Last	Percentage of
		on the	published	discount of
		latest	consolidated	market share
	Market	practicable	net asset value	price to net
	capitalisation	date	per share	asset value
	HK$ million	HK$	HK$	%
Kowloon Development	1,741.6	3.6	6.62	45.6
Company Limited			(as at 30/9/2002)
HKR International Limited	1,203.7	1.04	5.52	81.2
			(as at 30/9/2002)
Allied Properties (H.K.) Limited	1,096.2	0.224	1.16	80.7
			(as at 30/6/2002)
Asia Standard International	1,089.8	0.265	1.01	73.8
Group Limited			(as at 30/9/2002)
Silver Grant International	839.8	0.64	1.54	58.4
Industries Limited			(as at 30/6/2002)

As shown in the above schedule, the percentage of discount of market share price to net asset value of the above selected property companies ranges from 45.6% to 81.2%, among which three companies’ share price closed on the latest practicable date at over 70% discount to their respective net asset value. The simple average discount of all the comparables is approximately 67.9%. In the absence of the Proposed Offers, it is, in our opinion, unlikely that the discount to net assets of over 80% at which the Asean Resources shares have recently been standing will narrow to the approximately 61.4% discount to Asean Resources’ latest published unaudited net asset value per share of HK$2.59 per Asean Resources share as at 30th September, 2002 which the Aggregate Offer Price represents.

DISCUSSION AND CONCLUSION

(a) The Reorganisation (special resolution no. 2)

We consider the principle which governs the Reorganisation is a fair one as all Asean Resources shareholders are treated even-handedly and will have the same pro rata holdings in Elizabeth Asean and Besteam as they currently have in Asean Resources.

In addition, we consider the Reorganisation, with the Proposed Offers, enhances shareholder value, as evidenced by the rise in the market price of Asean Resources shares after the Announcement. Before the Announcement, the shares were trading at HK$0.52 per Asean Resources share and had been traded at around this level for some months. After the Announcement, they increased by approximately 60% to HK$0.88 per Asean Resources share and have continued to trade at about that price since that time.

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LETTER FROM SOMERLEY

It may be objected that it is not appropriate to support a proposal which results in approximately half of a listed group’s net assets being held by an unlisted company. We consider this too sweeping; we accept that there could be occasions when such a step is detrimental to shareholders’ interests but we believe this is not one of them. Strong measures are warranted to reduce the unacceptably high discount to net assets at which the Asean Resources shares have persistently traded. In our view, the directors of Asean Resources are acting correctly in being prepared to sell control of the prize asset, Elizabeth House, as part of a package of measures, including the use of Besteam, an unlisted investment vehicle, to tackle the discount and enhance shareholder value.

The unlisted company, Besteam, which will hold the property assets other than Elizabeth House, will nevertheless be a public company and have similar articles of association as a listed company. It will also be subject to the Takeovers Code as long as it remains a public company. While Besteam shares will not be listed, Besteam will be managed to realise assets and return surplus cash to Besteam shareholders. We consider this provides a means of liquidity, less satisfactory perhaps than a listing but acceptable in view of the low trading volume and poor prices of Asean Resources shares prior to the Announcement. All in all, we consider Besteam will prove an acceptable investment vehicle for the Independent Shareholders. If the Independent Shareholders wish to avoid an unlisted investment, they will be able to realise cash by accepting the unconditional Besteam offer, although this is pitched at a level we consider unattractive except if the Independent Shareholders’ strategy is to lock in a short term profit over recent market prices.

The Asean Resources shares have been trading at a significant discount (over 80%) to their underlying net asset value over the past two years. This phenomenon is common to other similar size property companies in Hong Kong and, in view of the current property market, is not, in our opinion, likely to improve significantly without radical action from management. The last trading price of the Asean Resources shares prior to the Announcement was HK$0.52 per Asean Resources share. If the Reorganisation becomes effective, the Asean Resources shareholders will have the opportunity to receive not less than HK$0.6269 in cash for each Asean Resources share held (being the proposed cash dividend of HK$0.5053 per Asean Resources share plus the Besteam offer price of HK$0.1216 per Besteam share). If the Asean Resources offer also proceeds, the Independent Shareholders will have the opportunity to receive the Aggregate Offer Price of HK$1.00.

(b) Circumstances in which the Asean Resources offer will be required to be made to the Independent Shareholders (ordinary resolution no. 3)

If the Reorganisation and the sale and purchase agreement are completed, Mexan Group will be required to make the Asean Resources offer. In our opinion, there are significant benefits to the Independent Shareholders in having the opportunity to consider the Asean Resources offer, which represents a premium of approximately 49% to the 180 trading-day weighted average price of HK$0.59 per Asean Resources share prior to the Announcement. Other than the Asean Resources shares remaining listed and traded on the Stock Exchange, the conditions of the sale and purchase agreement are the entering into of the management contract and the cancellation of the share options, which is being implemented through the share option agreement. The management contract and the share option agreement are being submitted for the Independent Shareholders’ approval through ordinary resolution no. 3 to be proposed at the special general meeting.

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LETTER FROM SOMERLEY

(i) The management contract

As discussed above, the Guaranteed Net Rental Income under the management contract is closely based on the present annual rate of rental receivable. There are small numbers of vacant units which could affect the outcome, but the likely effect of the management contract on Asean Resources and Besteam seems broadly neutral.

Independent Shareholders will have an equal interest in both Elizabeth Asean and Besteam immediately after the Reorganisation, so initially they would neither benefit or lose if there were a shift of value between Elizabeth Asean and Besteam. This would be subject to change if there are different levels of acceptance of the Besteam offer (which will definitely be made if the Reorganisation is completed) and of the Asean Resources offer, which is subject to the conditions summarised in the paragraph headed “Asean Resources offer” on page 32 of this circular. United Goal Development has also expressed the intention to exercise the power of Compulsory Acquisition. Hence it is possible that Besteam would become a private company wholly owned by United Goal Development and its concert parties after completion of the Besteam offer. As we estimate the effect of the management contract on Elizabeth Asean and Besteam will be broadly neutral, we do not consider the possibility of differing levels of acceptance of the Proposed Offers or of Besteam becoming a private company wholly owned by United Goal Development as material factors in our review of the management contract.

(ii) The share option agreement

The arrangements proposed under the share option agreement are standard in most aspects. The cancellation price is set by a fair and usual formula and the arrangements proposed if the Reorganisation is completed but the share options are not cancelled (because the Asean Resources offer is not made) are reasonable. Owing to the time taken in negotiations of the Transactions, the original expiry date for the options of 21st March, 2003 has been extended for six months. Asean Resources seeks ratification by the Independent Shareholders of the extension under the share option agreement.

It would seem reasonable to us for the Independent Shareholders to approve the extension. The preliminary agreement with Maxan Group was signed on 8th October, 2002. Had that agreement been implemented on a normal timetable, the optionholders’ consent to the cancellation of the share options would have been required for the Asean Resources offer to proceed. The prolonged delay was due, inter alia, to discussions with the regulatory authorities on the nature and consequences of the asset injection agreement. If during that time optionholders had chosen to exercise the share options, Mexan Group might not have been willing to proceed. Consequently, the optionholders and Asean Resources agreed between themselves to maintain the status quo. This was a potential risk to the optionholders, as consent of Asean Resources shareholders (other than optionholders) is required as well as that of Asean Resources itself. As several of the optionholders were also involved in conducting or assisting in negotiations with Mexan Group, it seems against the spirit of the proceedings if they incur financial losses because they have assisted in securing potential gains for the Independent Shareholders.

The cancellation fee of HK$0.32 per share option (approximately HK$33 million in total) will be paid to the optionholders under the share option agreement from the internal funds of Asean Resources. The optionholders have also agreed, in the event that the share options are not cancelled, to accept the Besteam share option offer at a price of HK$0.1116

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LETTER FROM SOMERLEY

per Besteam option (approximately HK$11.6 million in total). This cancellation will be funded by United Goal Development, not Besteam. Since the Besteam options will be cancelled, there is no potential dilution for the Besteam shareholders involved in the granting of such options. Consequently, in our opinion, the interests of the Independent Shareholders are not prejudiced by the extension of the option period for six months and it would in our opinion be reasonable for the Independent Shareholders to agree to this extension.

OPINION

We are of the view that the terms of the Reorganisation are fair and reasonable and that the Reorganisation is in the interests of the Independent Shareholders. Consequently, we advise the independent board committee to recommend the Independent Shareholders to vote in favour of special resolution no. 2 to be proposed at the special general meeting to approve and implement the Reorganisation. We also consider the terms of the management contract and of the share option agreement to be fair and reasonable to the Independent Shareholders in the context of the Reorganisation and the Asean Resources offer. We therefore advise the independent board committee to recommend the Independent Shareholders to vote in favour of ordinary resolution no. 3 to approve the management contract and the share option agreement.

Yours faithfully, for and on behalf of SOMERLEY LIMITED M. N. Sabine Chairman

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APPENDIX I FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

FINANCIAL SUMMARY

The following is a summary of the audited consolidated profit and loss account and consolidated balance sheet of the Asean Resources group for the three years ended 31st March, 2000, 31st March, 2001 and 31st March, 2002 extracted from the relevant annual reports of Asean Resources.

RESULTS Turnover Profit/(loss) before taxation Taxation Profit/(loss) after taxation Minority interests Profit/(loss) attributable to shareholders ASSETS AND LIABILITIES Total assets Total liabilities Minority interests Shareholders’ funds	Year 2000 HK$’000 372,145 103,882 (20,456) 83,426 39 83,465 5,301,714 (983,466) (152,953) 4,165,295	ended 31st March, 2001 2002 HK$’000 HK$’000 686,788 615,055 (191,291) (164,532) (4,731) (1,998) (196,022) (166,530) (78,721) (16,928) (274,743) (183,458) 4,837,657 4,306,575 (1,010,989) (887,521) (231,491) (114,844) 3,595,177 3,304,210

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APPENDIX I FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

FINANCIAL STATEMENTS

The following is a summary of the audited consolidated accounts of the Asean Resources group for the two years ended 31st March, 2001 and 31st March, 2002 as extracted from the relevant annual report of Asean Resources.

CONSOLIDATED PROFIT AND LOSS ACCOUNT

For the year ended 31st March, 2002

Notes Turnover 2 Cost of sales Other revenues 2 Administrative expenses (Loss)/profit from operations 3 Finance costs 4 Share of results of associated companies Write down in value of listed securities Loss before taxation Taxation 5 Loss after taxation Minority interests Loss attributable to shareholders 6 & 21 Loss per share 8 – Basic	2002 HK$’000 615,055 (711,276) (96,221) 17,677 (57,476) (136,020) (31,556) 3,044 – (164,532) (1,998) (166,530) (16,928) (183,458) (14.26 cents)	2001 HK$’000 686,788 (430,353) 256,435 11,255 (56,990) 210,700 (50,117) (18,204) (333,670) (191,291) (4,731) (196,022) (78,721) (274,743) (21.36 cents)

– 61 –

APPENDIX I FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

CONSOLIDATED BALANCE SHEET

As at 31st March, 2002

Note Fixed assets 10 Investments in associated companies 12 Properties held for/under development 13 Long term investments 14 Long term receivable 15 Current assets Accounts and other receivables, deposits and prepayments 16 Properties held for sale 17 Other investments 18 Tax recoverable Cash and bank balances Current liabilities Accounts payable, deposits received and accrued charges 19 Taxation Dividend payable Bank overdrafts 22 Bank loans, unsecured 22 Bank loans, secured 22 Net current assets Total assets less current liabilities Financed by: Share capital 20 Reserves 21 Shareholders’ funds Minority interests Bank loans, secured 22	Note Fixed assets 10 Investments in associated companies 12 Properties held for/under development 13 Long term investments 14 Long term receivable 15 Current assets Accounts and other receivables, deposits and prepayments 16 Properties held for sale 17 Other investments 18 Tax recoverable Cash and bank balances Current liabilities Accounts payable, deposits received and accrued charges 19 Taxation Dividend payable Bank overdrafts 22 Bank loans, unsecured 22 Bank loans, secured 22 Net current assets Total assets less current liabilities Financed by: Share capital 20 Reserves 21 Shareholders’ funds Minority interests Bank loans, secured 22	2002 HK$’000 1,932,936 1,027,265 240,135 3,001 6,774	2002 HK$’000 1,932,936 1,027,265 240,135 3,001 6,774	2002 HK$’000 1,932,936 1,027,265 240,135 3,001 6,774	2001 HK$’000 1,939,032 1,212,280 726,779 3,424 –
		159,054 229,541 3,847 – 704,022			460,152 371,734 65,151 2 59,103
		1,096,464			956,142
		65,072 5,723 481 – – 44,851			91,422 5,723 762 14,875 60,000 354,939
		116,127 980,337 4,190,448 128,648 3,175,562 3,304,210 114,844 771,394 4,190,448			527,721 428,421 4,309,936 128,648 3,466,529 3,595,177 231,491 483,268 4,309,936

– 62 –

APPENDIX I FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

BALANCE SHEET

As at 31st March, 2002

Note Investments in subsidiaries 11 Current assets Accounts and other receivables, deposits and prepayments Cash and bank balances Current liabilities Accounts payable, deposits received and accrued charges Dividend payable Bank loans, unsecured 22 Net current assets/(liabilities) Total assets less current liabilities Financed by: Share capital 20 Reserves 21 Shareholders’ funds	Note Investments in subsidiaries 11 Current assets Accounts and other receivables, deposits and prepayments Cash and bank balances Current liabilities Accounts payable, deposits received and accrued charges Dividend payable Bank loans, unsecured 22 Net current assets/(liabilities) Total assets less current liabilities Financed by: Share capital 20 Reserves 21 Shareholders’ funds	2002 HK$’000 2,283,945 16 1,292 1,308	2002 HK$’000 2,283,945 16 1,292 1,308	2002 HK$’000 2,283,945 16 1,292 1,308	2001 HK$’000 1,976,779
					8 1,295
					1,303
		473 481 –			887 762 60,000
		954 354 2,284,299 128,648 2,155,651 2,284,299			61,649 (60,346) 1,916,433 128,648 1,787,785 1,916,433

– 63 –

APPENDIX I FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31st March, 2002

Note Net cash inflow from operating activities 24(a) Returns on investments and servicing of finance Interest received Interest paid Dividends received from an associated company Dividends received from quoted investments Dividends paid Net cash outflow from returns on investments and servicing of finance Taxation Hong Kong profits tax refunded Overseas tax paid Total tax refunded/(paid) Investing activities Purchase of fixed assets, properties held for/under development and long term investments Purchase of subsidiaries, net of cash and cash equivalents acquired Proceeds from disposal of interests in subsidiaries 24(b) Decrease in investments in associated companies Net amounts repaid from/(advanced to) associated companies Proceeds from capital repayment of long term investments Proceeds from disposal of fixed assets Net cash inflow/(outflow) from investing activities Net cash inflow/(outflow) before financing	2002 HK$’000 452,757 ---------------- 8,823 (35,647) – 2,145 (3) (24,682) ---------------- 2 – 2 ---------------- (11,815) – 291,748 – 100,389 1,035 1,885 383,242 ---------------- 811,319 ----------------	2001 HK$’000 142,446 ---------------- 5,177 (84,051) 1,979 253 (12,786) (89,428) ---------------- 24 (377) (353) ---------------- (125,344) (670) 29,400 57,224 (78,949) – 1,900 (116,439) ---------------- (63,774) ----------------

– 64 –

FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

APPENDIX I

Note Financing Bank loans raised 24(c) Repayment of bank loans 24(c) Decrease in bank deposits pledged for banking facilities 24(c) (Repayment of loans)/contributions from minority shareholders 24(c) Net cash (outflow)/inflow from financing Increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effect of foreign exchange rate changes Cash and cash equivalent at the end of the year Analysis of the balances of cash and cash equivalents: Cash and bank balances Quoted investments Bank overdrafts	2002 HK$’000 248,000 (329,962) – (125,550) (207,512) ---------------- 603,807 107,862 (3,800) 707,869 704,022 3,847 – 707,869	2001 HK$’000 112,248 (124,580) 56,225 26,414 70,307 ---------------- 6,533 105,154 (3,825) 107,862 59,103 63,634 (14,875) 107,862

– 65 –

APPENDIX I FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

CONSOLIDATED STATEMENT OF RECOGNISED GAINS AND LOSSES

For the year ended 31st March, 2002

Note Revaluation deficit on investment properties 21 Exchange differences arising on translation of a subsidiary 21 Share of post-acquisition reserve movements of associated companies 21 Reserves released upon reclassification of an associated company 21 Net losses not recognised in the consolidated profit and loss account Loss attributable to shareholders 21 Less:_Revaluation reserves realised upon disposal of properties _21 Total recognised losses Goodwill arising on acquisition of subsidiaries 21 Reserve released upon disposal of a subsidiary 21	2002 HK$’000 (7,845) (3,800) (85,672) – (97,317) (183,458) (11,170) (291,945) – 978 (290,967)	2001 HK$’000 (102,580) (3,825) (10,831) (132,467) (249,703) (274,743) (32,557) (557,003) (250) – (557,253)

– 66 –

APPENDIX I FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

NOTES TO THE ACCOUNTS

For the year ended 31st March, 2002

1. PRINCIPAL ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of these accounts are set out below:

(a) Basis of preparation

The accounts have been prepared in accordance with accounting principles generally accepted in Hong Kong and comply with accounting standards issued by the Hong Kong Society of Accountants (“HKSA”). They have been prepared under the historical cost convention except that, as disclosed in the accounting policies below, certain properties and investments in securities are stated at fair value.

In the current year, the Group adopted the following Statements of Standard Accounting Practice (“SSAPs”) issued by the HKSA which are effective for accounting periods commencing on or after 1st January, 2001:

SSAP	9 (revised)	:	Events after the balance sheet date
SSAP	14 (revised)	:	Leases (effective for periods commencing on or after 1st July, 2000)
SSAP	26	:	Segment reporting
SSAP	28	:	Provisions, contingent liabilities and contingent assets
SSAP	29	:	Intangible assets
SSAP	30	:	Business combinations
SSAP	31	:	Impairment of assets
SSAP	32	:	Consolidated financial statements and accounting for investments in
			subsidiaries

The adoption of the above new SSAPs does not have any material effect on the result for the year ended 31st March, 2001.

(b) Group accounting

(i) Consolidation

The consolidated accounts include the accounts of the Company and its subsidiaries made up to 31st March. A subsidiary is a company in which the Company, directly or indirectly, controls the composition of the board of directors, or controls more than half of the voting power or holds more than half of the issued share capital.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated profit and loss account from the effective date of acquisition or up to the effective date of disposal, as appropriate.

All significant intercompany transactions and balances within the Group are eliminated on consolidation.

The gain or loss on the disposal of a subsidiary or an associated company represents the difference between the proceeds of the sale and the Group’s share of its net assets together with any unamortised goodwill or negative goodwill or goodwill/negative goodwill taken to reserves and which was not previously charged or recognised in the consolidated profit and loss account.

Minority interests represent the interests of outside shareholders in the operating results and net assets of subsidiaries.

In the Company’s balance sheet the investments in subsidiaries are stated at cost less provision for impairment losses. The results of subsidiaries are accounted for by the Company on the basis of dividends received and receivable.

(ii) Associated companies

An associated company is a company, not being a subsidiary, in which an equity interest is held for the long term and significant influence is exercised in its management.

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FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

APPENDIX I

The consolidated profit and loss account includes the Group’s share of the results of associated companies for the year, and the consolidated balance sheet includes the Group’s share of the net assets of the associated companies and also goodwill/negative goodwill (net of accumulative amortisation) on acquisition.

In arriving at the Group’s share of results and net asset value of the associated companies, the hotel properties owned by the associated companies were valued based on their open market value. In addition, no depreciation is provided on hotel properties held on leases of more than 20 years as the directors consider that the value of the hotel properties would not materially diminish over time due to the fact that hotel properties would be maintained in a continuous state of proper repair and improvements would be made thereto from time to time.

The Group’s share of revaluation surplus of the hotel properties owned by associated companies is accounted for as other properties revaluation reserve in the consolidated accounts of the Group. Subsequent decreases in valuation are first set off against surplus from earlier valuations and debited to operating profit thereafter. Any subsequent increases are credited to operating profit up to the amount previously debited.

Certain associated companies have their financial year ended on 31st December which are not coterminous with that of the Company. Accordingly, these companies have been equity accounted for based on the audited results for the nine months up to 31st December and the management accounts for the remaining period.

(c) Fixed assets

(i) Investment properties

Investment properties are interests in land and buildings in respect of which construction work and development have been completed and which are held for their long term investment potential, any rental income being negotiated at arm’s length.

Investment properties held on leases with unexpired periods greater than 20 years are valued annually by independent professional valuers. The valuations are on an open market value basis related to individual properties and separate values are not attributed to land and buildings. The valuations are incorporated in the annual accounts. Increases in valuation are credited to the investment properties revaluation reserve. Decreases in valuation are first set off against increases on earlier valuations on a portfolio basis and debited to operating profit thereafter. Any subsequent increases are credited to operating profit up to the amount previously debited.

Upon disposal, the relevant portion of the revaluation reserve realised in respect of previous valuations of an investment property is released from the revaluation reserve to the profit and loss account.

(ii) Other tangible fixed assets

Other tangible fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses.

Depreciation of other tangible fixed assets is calculated to write off their costs less accumulated impairment losses on a straight line basis over their estimated useful lives to the Group. The principal annual rates of depreciation are as follows:

Furniture, fixtures and equipment	10% – 20%
Motor vehicles and others	10% – 20%

Major costs incurred in restoring fixed assets to their normal working condition are charged to the profit and loss account.

The gain or loss on disposal of other tangible fixed assets are the difference between the net sales proceeds and the carrying amount of the relevant asset, and is recognised in the profit and loss account.

At each balance sheet date, both internal and external sources of information are considered to assess whether there is any indication that other tangible fixed assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated and where relevant, an impairment loss is recognised to reduce the asset to its recoverable amount. Such impairment losses are recognised in the profit and loss account.

– 68 –

APPENDIX I FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

(d) Properties held for/under development

Properties held for/under development comprise land at cost or, in the case of properties previously held by the Group for other purposes, carrying value as at the date of reclassification, and development costs including construction expenditure and attributable interest and professional charges capitalised during the development period, less incidental rental income.

(e) Goodwill/negative goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net assets of the acquired subsidiaries or associated companies at the date of acquisition.

Goodwill on acquisition occurring on or after 1st April, 2001 is included in intangible assets and is amortised using the straight-line method over its estimated useful life.

Goodwill on acquisitions that occurred prior to 1st April, 2001 was written off against reserves and has not been restated as is allowed under the transitional provision in SSAP 30. However, any impairment arising on such goodwill is accounted for in accordance with SSAP 31.

Negative goodwill represents the excess of the fair value of the Group’s share of the net assets acquired over the cost of acquisition.

For acquisitions on or after 1st April, 2001, negative goodwill is presented in the same balance sheet classification as goodwill. To the extent that negative goodwill relates to expectations of future losses and expenses that are identified in the Group’s plan for the acquisition and can be measured reliably, but which do not represent identifiable liabilities at the date of acquisition, that portion of negative goodwill is recognised in the profit and loss account when the future losses and expenses are recognised. Any remaining negative goodwill, not exceeding the fair values of the non-monetary assets acquired, is recognised in the profit and loss account over the remaining weighted average useful life of those assets; negative goodwill in excess of the fair values of those non-monetary assets is recognised in the profit and loss account immediately.

For acquisition prior to 1st April, 2001, negative goodwill was taken directly to reserves on acquisition and has not been restated as is allowed by the transitional provision in SSAP 30.

(f) Investments

Long term investments are stated at cost less any provision made to the extent that the directors consider significant permanent diminution in value has taken place. The carrying amounts of these investments are reviewed at each balance sheet date to assess whether the fair values have declined below the carrying amounts. When a decline other than temporary has occurred, the carrying amount of such investments should be reduced to its fair value. The amount of the reduction is recognised as an expense in the profit and loss account.

Quoted and unquoted investments held for trading purposes are carried at fair value on a portfolio basis. At each balance sheet date, the net unrealised gains or losses arising from the changes in fair value of these investments are recognised in the profit and loss account. Profits or losses on disposal of these investments, representing the difference between the net sales proceeds and the carrying amounts, are recognised in the profit and loss account as they arise.

(g) Accounts receivable

Provision is made against accounts receivable to the extent which they are considered to be doubtful. Accounts receivable in the balance sheet are stated net of such provision.

(h) Properties held for sale

Properties held for sale are stated at the lower of cost and net realisable value. Cost represents the acquisition cost or, in the case of properties previously held by the Group for other purposes, carrying value as at the date of reclassification. Net realisable value is determined on the basis of anticipated sales proceeds less estimated selling expenses.

(i) Cash and cash equivalents

Cash and cash equivalents for the purpose of the cash flow statement comprise cash on hand, deposits held at call with banks, cash investments with a maturity of three months or less from date of investment and bank overdrafts.

– 69 –

APPENDIX I FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

(j) Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.

(k) Contingent liabilities

A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. It can also be a present obligation arising from past events that is not recognised because it is not probable that outflow of economic resources will be required or the amount of obligation cannot be measured reliably.

A contingent liability is not recognised but is disclosed in the notes to the accounts. When a change in the probability of an outflow occurs so that outflow is probable, they will then be recognised as a provision.

(l) Taxation

The charge for taxation is based on the result for the year as adjusted for items which are non-assessable or disallowable. Timing differences arise from the recognition for tax purposes of certain items of income and expense in a different accounting period from that in which they are recognised in the accounts. The deferred tax effect of timing differences, computed under the liability method, is recognised in the accounts to the extent it is probable a liability or an asset will crystallise in the foreseeable future.

(m) Revenue recognition

Revenues from the sale of property interests and securities trading are recognised when the significant risks and rewards of ownership have been transferred to the buyer.

Revenue from pre-sale of properties are recognised by reference to the stage of completion of construction work, which is measured by reference to the proportion of construction costs incurred up to the balance sheet date to the estimated total construction costs to completion with due allowance for contingent.

Operating lease rental income is recognised on a straight line basis.

Dividend income is recognised when the right to receive payment is established.

Interest income is recognised on a time proportion basis, taking into account the principal amounts outstanding and the interest rates applicable.

(n) Retirement benefit costs

The Group participates in a master trust scheme provided by an independent Mandatory Provident Fund (“MPF”) service provider to comply with the requirements under the MPF Schemes Ordinance. Contributions paid and payable by the Group to the scheme are charged to the profit and loss account.

(o) Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to be readied for its intended use or sale are capitalised as part of the cost of that asset. All other borrowing costs are charged to the profit and loss account in the year in which they are incurred.

(p) Segment reporting

The Group has determined that business segments be presented as the primary reporting format. No geographical analysis is provided as less than 10% of the consolidated turnover and less than 10% of the consolidated segment assets are attributable to markets outside Hong Kong.

Unallocated costs represent corporate expenses. Segment assets consist primarily of property assets and exclude items such as other receivables and cash and bank balance. Segment liabilities comprise operating liabilities and exclude items such as taxation and certain corporate borrowings. Capital expenditure comprises additions to investment properties.

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FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

APPENDIX I

(q) Translation of foreign currencies

Transactions in foreign currencies are translated at exchange rates ruling at the transaction dates. Monetary assets and liabilities expressed in foreign currencies at the balance sheet date are translated at rates of exchange ruling at the balance sheet date. Exchange differences arising in these cases are dealt with in the profit and loss account.

The accounts of subsidiaries expressed in foreign currencies are translated at the rates of exchange ruling at the balance sheet date. Exchange differences arising are taken directly to the exchange reserve.

(r) Operating leases

Leases where substantially all the risks and rewards of ownership of assets remain with the leasing company are accounted for as operating leases. Payments made under operating leases net of any incentives received from the leasing company are charged to the profit and loss account on a straight-line basis over the lease periods.

2. REVENUE AND TURNOVER

The Group is principally engaged in property development and investment, securities investment and trading and investment holding. Revenues recognised during the year are as follows:

Sale of property interests Pre-sale of property interests Rental income Proceeds from securities trading Dividend income from quoted investments Turnover Interest income Other income Other revenues Total revenues	Group 2002 2001 HK$’000 HK$’000 472,280 – – 591,210 91,754 92,759 48,876 2,566 2,145 253 615,055 686,788 ------------ ------------ 12,311 5,177 5,366 6,078 17,677 11,255 ------------ ------------ 632,732 698,043	Group 2002 2001 HK$’000 HK$’000 472,280 – – 591,210 91,754 92,759 48,876 2,566 2,145 253 615,055 686,788 ------------ ------------ 12,311 5,177 5,366 6,078 17,677 11,255 ------------ ------------ 632,732 698,043
		686,788 ------------ 5,177 6,078
		11,255 ------------
		698,043

(a) Primary reporting format – business segments

The Group is organised into three main business segments:

Property rental
Property development and investment
Securities investment and trading

Other operations of the Group comprise investments in associated companies, whose principal activity is hotel ownership.

There are no sales or other transactions between the business segments.

– 71 –

FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

APPENDIX I

Turnover Segment result Unallocated corporate expenses (net) Interest income Finance costs Share of results of associated companies Loss before taxation Taxation Loss after taxation Minority interests Loss attributable to shareholders Segment assets Investments in associated companies Unallocated corporate assets Consolidated total assets Segment liabilities Unallocated corporate liabilities Consolidated total liabilities Capital expenditure	Property development Property and rental investment 2002 2002 HK$’000 HK$’000 91,754 472,280 86,646 (171,025) – (29,237) 1,936,777 484,459 – 50,340 23,167 31,499 5,345 –	Securities investment and trading 2002 HK$’000 51,021 (11,842) – 4,350 – – –	Other operations Consolidated 2002 2002 HK$’000 HK$’000 – 615,055 – (96,221) (52,110) (148,331) 12,311 (31,556) 32,281 3,044 (164,532) (1,998) (166,530) (16,928) (183,458) – 2,425,586 976,925 1,027,265 853,724 4,306,575 – 54,666 832,855 887,521 –

– 72 –

FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

APPENDIX I

Turnover Segment result Unallocated corporate expenses (net) Write down in value of listed securities Interest income Finance costs Share of results of associated companies Loss before taxation Taxation Loss after taxation Minority interests Loss attributable to shareholders Segment assets Investments in associated companies Unallocated corporate assets Consolidated total assets Segment liabilities Unallocated corporate liabilities Consolidated total liabilities	Property development Property and rental investment 2001 2001 HK$’000 HK$’000 92,759 591,210 87,381 175,139 – (27) 1,940,147 1,516,232 – 77,578 28,664 52,452	Securities investment and trading 2001 HK$’000 2,819 (6,085) – 66,615 – –	Other operations Consolidated 2001 2001 HK$’000 HK$’000 – 686,788 – 256,435 (50,912) 205,523 (333,670) 5,177 (50,117) (18,177) (18,204) (191,291) (4,731) (196,022) (78,721) (274,743) – 3,522,994 1,134,702 1,212,280 102,383 4,837,657 – 81,116 929,873 1,010,989

(b) No geographical analysis is provided as less than 10% of the consolidated turnover and less than 10% of the consolidated (loss)/profit from operations of the Group are attributable to markets outside Hong Kong.

– 73 –

FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

APPENDIX I

3. (LOSS)/PROFIT FROM OPERATIONS

(Loss)/profit from operations is stated after crediting
and charging the following:
Crediting
Gross rental income from investment properties
_Less:_outgoings
Net rental income from investment properties
Gain on disposal of fixed assets
Charging
Auditors’ remuneration
– current year
– underprovision in previous year
Operating leases of land and buildings
Depreciation of fixed assets
Bad debts written off
Staff costs
Realised and unrealised losses on quoted investments
Loss on disposal of fixed assets

Group
2002
2001
HK$’000
HK$’000
91,754
92,759
(1,220)
(3,260)
90,534
89,499
752
–
993
1,072
55
159
1,048
1,231
2,576
977
1,763
6,156
20,954
2,293
19,677
23,555
12,952
6,338
–
4,770

4. FINANCE COSTS

Finance costs comprise the following:

Interest on bank loans and overdrafts – wholly payable within five years – not wholly payable within five years Interest on other loans – wholly payable within five years Total borrowing costs incurred Less:_amounts capitalised in properties held for/under development(note 13)_ Bank facilities arrangement fee	Group 2002 2001 HK$’000 HK$’000 7,588 53,706 28,059 30,304 33 41 35,680 84,051 (4,497) (35,597) 31,183 48,454 373 1,663 31,556 50,117

– 74 –

FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

APPENDIX I

5. TAXATION

Hong Kong profits tax has been provided at the rate of 16% (2001: 16%) on the estimated assessable profits for the year. Taxation on overseas profit has been calculated on the estimated assessable profit for the year at the rates of taxation prevailing in the countries in which the Group operates.

The amount of taxation charged to the consolidated profit and loss account represents:

Hong Kong profits tax – current Overseas taxation – current – under provision in prior years Share of taxation attributable to associated companies	Group 2002 2001 HK$’000 HK$’000 – – – 30 – 347 – 377 1,998 4,354 1,998 4,731	Group 2002 2001 HK$’000 HK$’000 – – – 30 – 347 – 377 1,998 4,354 1,998 4,731
		377 4,354
		4,731

Deferred taxation charge/(credit) for the year has not been provided in respect of the following:

Accelerated depreciation allowance Other timing differences	Group 2002 2001 HK$’000 HK$’000 258 28 2,547 (2,365 2,805 (2,337	Group 2002 2001 HK$’000 HK$’000 258 28 2,547 (2,365 2,805 (2,337
		(2,337

6. LOSS ATTRIBUTABLE TO SHAREHOLDERS

Included in the loss attributable to shareholders is a profit of HK$367,866,000 (2001: HK$3,881,000) which is dealt with in the Company’s own accounts.

7. RETIREMENT BENEFIT COSTS

Pursuant to the MPF Schemes Ordinance which became effective on 1st December, 2000, all employees of the Group in Hong Kong aged between 18 and 65 are enrolled in a MPF Scheme.

The MPF Scheme is a master trust scheme established under trust arrangement and governed by laws in Hong Kong. The assets of the MPF Scheme are held separately from the assets of the employer, the trustees and other service providers. Contributions are made to the MPF Scheme by the employers according to the MPF Schemes Ordinance (the “MPF contribution”). The employees also contribute a corresponding amount to the MPF Scheme from 31st December, 2000 if their relevant income is more than HK$4,000 per month. The MPF contribution are fully and immediately vested in the employees as accrued benefits once they are paid to the approved trustees of the MPF Scheme. Investment income or profit derived from the investment of accrued benefits (after taking into account any loss arising from such investment) is also immediately vested in the employees.

The MPF contribution made by the Group during the year amounted to HK$342,000 (2001: HK$140,000) of which HK$28,000 (2001: HK$33,000) remains payable as at 31st March, 2002.

8. LOSS PER SHARE

The calculation of the basic loss per share is based on the loss attributable to shareholders of HK$183,458,000 (2001: HK$274,743,000) and on 1,286,482,836 shares (2001: 1,286,482,836 shares) in issue during the year.

For the year ended 31st March, 2002 and 2001, diluted loss per share is not shown as the potential ordinary shares are anti-dilutive.

– 75 –

FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

APPENDIX I

9. DIRECTORS’ AND SENIOR MANAGEMENT’S EMOLUMENTS

(a) The aggregate amounts of emoluments payable to directors of the Company during the year are as follows:

Fees Salaries, allowances and benefits in kind MPF contribution	Group 2002 2001 HK$’000 HK$’000 120 96 7,573 9,652 36 16 7,729 9,764	Group 2002 2001 HK$’000 HK$’000 120 96 7,573 9,652 36 16 7,729 9,764
		9,764

Directors’ fees include HK$24,000 (2001: HK$36,000) paid to the independent non-executive directors.

The emoluments of the directors fell within the following bands:

Emolument bands	Number of directors	Number of directors
HK$	2002	2001
0 – 1,000,000	7	5
1,000,001 – 1,500,000	1	2
2,000,001 – 2,500,000	1	1
3,500,001 – 4,000,000	1	–
4,000,001 – 4,500,000	–	1

There were no arrangements under which any director waived or agreed to waive any emoluments in respect of the years ended 31st March, 2002 and 31st March, 2001.

(b) Five highest paid individuals

The five individuals whose emoluments were the highest in the Group for the year include three (2001: four) directors whose emoluments are reflected in the analysis presented in note 9(a) above. The emoluments payable to the remaining two (2001: one) individuals during the year are as follows:

Salaries and other benefits MPF contribution The emoluments fell within the following bands: Emolument bands HK$ 0 – 1,000,000 1,000,001 – 1,500,000 1,500,001 – 2,000,000	Group 2002 2001 HK$’000 HK$’000 2,189 1,527 24 4 2,213 1,531 Number of individuals 2002 2001 1 – 1 – – 1	Group 2002 2001 HK$’000 HK$’000 2,189 1,527 24 4 2,213 1,531 Number of individuals 2002 2001 1 – 1 – – 1
		1,531

		individuals 2001 – – 1

– 76 –

FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

APPENDIX I

10. FIXED ASSETS – Group

Cost or valuation At 1st April, 2001 Additions Adjustment on revaluation_(note 21)_ Disposals Disposal of subsidiaries At 31st March, 2002 Accumulated depreciation At 1st April, 2001 Charge for the year Disposals Disposal of subsidiaries At 31st March, 2002 Net book value At 31st March, 2002 At 31st March, 2001	Investment properties HK$’000 1,932,000 5,345 (7,845) (2,230) – 1,927,270 --------------- – – – – – --------------- 1,927,270 1,932,000	Furniture, fixtures and equipment HK$’000 8,974 207 – (286) – 8,895 --------------- 3,018 1,373 (268) – 4,123 --------------- 4,772 5,956	Motor vehicles and others HK$’000 16,105 414 – (5,793) (4,116) 6,610 --------------- 15,029 390 (5,587) (4,116) 5,716 --------------- 894 1,076	Total HK$’000 1,957,079 5,966 (7,845 (8,309 (4,116
				1,942,775 --------------- 18,047 1,763 (5,855 (4,116
				9,839 ---------------
				1,932,936

				1,939,032

The analysis of the cost or valuation of the above assets at 31st March, 2002 is as follows:

Furniture, fixtures Investment and properties equipment HK$’000 HK$’000 At cost – 8,895 At 2002 professional valuation 1,927,270 – 1,927,270 8,895 The analysis of the cost or valuation of the above assets at 31st March, 2001 is a Furniture, fixtures Investment and properties equipment HK$’000 HK$’000 At cost – 8,974 At 2001 professional valuation 1,932,000 – 1,932,000 8,974	Motor vehicles and others HK$’000 6,610 – 6,610 s follows: Motor vehicles and others HK$’000 16,105 – 16,105	Total HK$’000 15,505 1,927,270
		1,942,775

		Total HK$’000 25,079 1,932,000
		1,957,079

– 77 –

FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

APPENDIX I

The Group’s interests in investment properties are analysed as follows:

In Hong Kong, held on leases of over 50 years Outside Hong Kong, held on leases of over 50 years	2002 HK$’000 1,920,020 7,250 1,927,270	2001 HK$’000 1,924,100 7,900
		1,932,000

Investment properties were revalued at 31st March, 2002 on the basis of their open market value by independent property valuers, DTZ Debenham Tie Leung Limited.

At 31st March, 2002, the carrying value of investment properties pledged as securities for banking facilities granted to the Group (note 22) amounted to HK$1,912,300,000 (2001: HK$1,912,800,000).

11. INVESTMENTS IN SUBSIDIARIES

Unlisted shares at cost Amounts due from subsidiaries	Company 2002 2001 HK$’000 HK$’000 1 938,181 2,283,944 1,038,598 2,283,945 1,976,779	Company 2002 2001 HK$’000 HK$’000 1 938,181 2,283,944 1,038,598 2,283,945 1,976,779
		1,976,779

The amounts due from subsidiaries are unsecured, non-interest bearing and have no fixed terms of repayment.

Particulars of principal subsidiaries are set out in note 29 to the accounts.

STATEMENT PURSUANT TO PARAGRAPH 25 OF THE TENTH SCHEDULE OF THE COMPANIES ORDINANCE

The following subsidiary’s financial year is not co-terminous with that of Company:

		Length of
	Accounting	accounting	Reason for
	date of	period of	using different
	subsidiary	subsidiary	accounting date
南華投資股份有限公司	31st December	12 months	Compliance with local
			regulations

12. INVESTMENTS IN ASSOCIATED COMPANIES

Share of net assets Amounts due from associated companies Amounts due to associated companies	Group 2002 2001 HK$’000 HK$’000 604,261 688,887 423,045 523,444 (41) (51 1,027,265 1,212,280	Group 2002 2001 HK$’000 HK$’000 604,261 688,887 423,045 523,444 (41) (51 1,027,265 1,212,280
		1,212,280

Particulars of principal associated companies are set out in note 30 to the accounts.

The amounts due from and due to associated companies are unsecured, non-interest bearing and have no fixed terms of repayment.

– 78 –

APPENDIX I FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

Information on material associated companies

The principal activity of the Group’s material associated company, New Unity Holdings Ltd., through its subsidiaries, is the ownership of hotels in Hong Kong. The financial information of New Unity Holdings Ltd., whose results and financial position are material in the context of the Group’s accounts, is summarised below.

The financial year ends for the principal subsidiaries of New Unity Holdings Ltd. are not co-terminous with that of the Company, and the information set out below is compiled based on information extracted from the audited consolidated accounts for the year ended 31st December, 2001 and the unaudited consolidated management accounts for the three month period to 31st March, 2002, adjusted to comply with the Group’s accounting policies.

Profit and loss account – Year ended 31st March Turnover Profit before taxation Profit after taxation and minority interests Profit attributable to the Group Balance sheet – As at 31st March Long term assets Current assets Current liabilities Net current assets/(liabilities) Long term liabilities Minority interests Shareholders’ funds Net assets attributable to the Group	New Unity Holdings Ltd. 2002 2001 HK$’000 HK$’000 725,658 823,124 64,575 70,640 60,580 66,388 30,290 33,194 4,447,321 4,668,630 --------------- --------------- 243,481 226,713 (190,165) (319,882) 53,316 (93,169) --------------- --------------- (2,869,416) (2,805,025) (346,997) (375,450) (3,216,413) (3,180,475) --------------- --------------- 1,284,224 1,394,986 642,112 697,493

– 79 –

FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

APPENDIX I

13. PROPERTIES HELD FOR/UNDER DEVELOPMENT

Cost Balance brought forward Additions Disposals Transfer to properties held for sale Balance carried forward Held on: Leases of over 50 years Leases of between 10 to 50 years	Group 2002 2001 HK$’000 HK$’000 726,779 1,303,696 20,346 258,546 (506,990) (463,729 240,135 1,098,513 – (371,734 240,135 726,779 213,167 205,856 26,968 520,923 240,135 726,779	Group 2002 2001 HK$’000 HK$’000 726,779 1,303,696 20,346 258,546 (506,990) (463,729 240,135 1,098,513 – (371,734 240,135 726,779 213,167 205,856 26,968 520,923 240,135 726,779
		1,098,513 (371,734
		726,779

		205,856 520,923
		726,779

All the properties held for/under development are situated in Hong Kong.

Included in additions during the year is interest capitalised of HK$4,497,000 (2001: HK$35,597,000).

14. LONG TERM INVESTMENTS


	2002	2001
	HK$’000	HK$’000
Unquoted investments, at cost net of provision	3,001	3,424

15. LONG TERM RECEIVABLE

Long term receivable carry interest at 1.75% above the Hong Kong dollar prime lending rate with an interest free period of 2 years from the respective dates when the amounts were drawn. Repayment will commence after the expiry of the interest free period and will be by instalments over a period of 18 years thereafter.

16. ACCOUNTS AND OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

Included in accounts and other receivables is an amount of HK$105,000,000 which represents a loan to a listed company in Hong Kong. The loan is unsecured, interest bearing at 1% above the Hong Kong dollar prime lending rate and repayable in full in November 2002.

At 31st March, 2002, rental receivable including related interests amounted to HK$8,444,000 (2001: HK$8,147,000) and the ageing analysis was as follows:

Current 31 – 60 days 61 – 90 days Over 90 days	Group 2002 2001 HK$’000 HK$’000 3,348 4,120 2,461 537 1,618 539 1,017 2,951 8,444 8,147	Group 2002 2001 HK$’000 HK$’000 3,348 4,120 2,461 537 1,618 539 1,017 2,951 8,444 8,147
		8,147

– 80 –

APPENDIX I FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

17. PROPERTIES HELD FOR SALE

All properties held for sale are situated in Hong Kong.

18. OTHER INVESTMENTS

Quoted investments, at fair value – Hong Kong – Overseas Unquoted investments, at fair value – Overseas	Group 2002 2001 HK$’000 HK$’000 3,773 63,560 74 74 3,847 63,634 – 1,517 3,847 65,151	Group 2002 2001 HK$’000 HK$’000 3,773 63,560 74 74 3,847 63,634 – 1,517 3,847 65,151
		63,634 1,517
		65,151

19. ACCOUNTS PAYABLE, DEPOSITS RECEIVED AND ACCRUED CHARGES

Included in the accounts payable, deposits received and accrued charges are rental deposits, construction costs payable and accruals.

Rental deposits amounting to HK$21,764,000 (2001: HK$24,479,000) are repayable when the tenancy contracts

lapse.

At 31st March, 2002, the ageing analysis of the construction costs payable were as follows:

Current 31 – 60 days 61 – 90 days	Group 2002 2001 HK$’000 HK$’000 224 2,128 – 53 26 – 250 2,181	Group 2002 2001 HK$’000 HK$’000 224 2,128 – 53 26 – 250 2,181
		2,181

Construction cost accruals, including retention money, amounted to HK$16,576,000 (2001: HK$48,273,000) and are payable in accordance with the terms of the construction contracts.

20. SHARE CAPITAL

Authorised: Balance brought forward and carried forward Issued and fully paid: Balance brought forward and carried forward	Number of ordinary shares of HK$0.10 each 2002 2001 2,000,000,000 2,000,000,000 1,286,482,836 1,286,482,836	2002 HK$’000 200,000 128,648	Value 2001 HK$’000 200,000

			128,648

– 81 –

FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

APPENDIX I

All the shares in issue rank pari passu in all respects including all rights as to dividends, voting and capital.

Under the share option scheme adopted by the Company on 8th September, 1998 and expired after 7th September, 2001, 79,682,000 and 24,518,000 share options were granted to certain directors of the Company and employees of the Group respectively during the year ended 31st March, 2000. These share options are exercisable during the period from 21st March, 2000 to 20th March, 2003 and entitle the holders thereof to subscribe for ordinary shares of HK$0.10 each of the Company at a subscription price of HK$0.68 per share (subject to adjustment). None of these share options has been exercised, lapsed or cancelled since the date of grant and no other share options were granted during the year.

21. RESERVES

Group

At 1st April, 2000 Deficit arising on revaluation Revaluation reserve realised upon disposal of properties Translation of accounts of a foreign subsidiary Goodwill arising on acquisition of subsidiaries Reserves released upon reclassification of an associated company Share of post-acquisition reserve movements of an associated company Loss for the year At 31st March, 2001 Retained by: Company and subsidiaries Associated companies At 1st April, 2001 Deficit arising on revaluation_(note 10)_ Revaluation reserves realised upon disposal of properties Translation of accounts of a foreign subsidiary Reserve released upon disposal of a subsidiary Share of post-acquisition reserve movements of associated companies Transfer of reserves Loss for the year At 31st March, 2002 Retained by: Company and subsidiaries Associated companies	Special reserve HK$’000 435,421 – – – – – – – 435,421 435,421 – 435,421 435,421 – – – 978 – (436,399 ) – – – – –	Share premium HK$’000 929,824 – – – – – – – 929,824 929,824 – 929,824 929,824 – – – – – – – 929,824 929,824 – 929,824	Capital redemption reserve HK$’000 129 – – – – – – – 129 129 – 129 129 – – – – – – – 129 129 – 129	Revaluation reserve – investment properties HK$’000 1,402,035 (102,580 ) – – – – – – 1,299,455 1,299,455 – 1,299,455 1,299,455 (7,845 ) (1,321 ) – – – – – 1,290,289 1,290,289 – 1,290,289	Revaluation reserve – properties held for/ under development HK$’000 58,305 – (32,557 ) – – – – – 25,748 25,748 – 25,748 25,748 – (9,849 ) – – – – – 15,899 15,899 – 15,899	Revaluation reserve – other properties HK$’000 433,867 – – – – – – – 433,867 – 433,867 433,867 433,867 – – – – (85,672 ) – – 348,195 – 348,195 348,195	Capital reserve HK$’000 215,125 – – – (250 ) (138,973 ) (1,749 ) – 74,153 (2,265 ) 76,418 74,153 74,153 – – – – – (4,161 ) – 69,992 (6,426 ) 76,418 69,992	Exchange reserve HK$’000 (5,358 ) – – (3,825 ) – 6,506 (9,082 ) – (11,759 ) (11,759 ) – (11,759 ) (11,759 ) – – (3,800 ) – – – – (15,559 ) (15,559 ) – (15,559 )	Retained profits HK$’000 554,434 – – – – – – (274,743 ) 279,691 101,089 178,602 279,691 279,691 – – – – – 440,560 (183,458 ) 536,793 357,145 179,648 536,793	Total HK$’000 4,023,782 (102,580 ) (32,557 ) (3,825 ) (250 ) (132,467 ) (10,831 ) (274,743 ) 3,466,529 2,777,642 688,887 3,466,529 3,466,529 (7,845 ) (11,170 ) (3,800 ) 978 (85,672 ) – (183,458 ) 3,175,562 2,571,301 604,261 3,175,562

– 82 –

FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

APPENDIX I

Company

At 1st April, 2000 Profit for the year At 31st March, 2001 Transfer of reserves Profit for the year At 31st March, 2002	Special reserve HK$’000 795,885 – 795,885 (795,885) – –	Share premium HK$’000 929,824 – 929,824 – – 929,824	Capital redemption reserve HK$’000 129 – 129 – – 129	Retained profits HK$’000 58,066 3,881 61,947 795,885 367,866 1,225,698	Total HK$’000 1,783,904 3,881
					1,787,785 – 367,866
					2,155,651

The special reserve arose from the scheme of arrangement which became effective on 12th May, 1992 and is distributable under the Companies Act 1981 of Bermuda.

As at 31st March, 2002, the reserves of the Company available for distribution amounted to HK$1,225,698,000 (2001: HK$857,832,000).

22. BANK LOANS AND OVERDRAFTS

Secured bank overdrafts Secured bank loans – current portion – long term portion Unsecured bank loans – current portion The analysis of the above is as follows: Bank loans and overdrafts Wholly repayable within five years Not wholly repayable within five years Current portion	Group 2002 2001 HK$’000 HK$’000 – 14,875 44,851 354,939 771,394 483,268 – 60,000 816,245 913,082 Group 2002 2001 HK$’000 HK$’000 81,936 379,131 734,309 533,951 816,245 913,082 44,851 429,814 771,394 483,268	Company 2002 2001 HK$’000 HK$’000 – – – – – – – 60,000 – 60,000 Company 2002 2001 HK$’000 HK$’000 – 60,000 – – – 60,000 – 60,000 – –	Company 2002 2001 HK$’000 HK$’000 – – – – – – – 60,000 – 60,000 Company 2002 2001 HK$’000 HK$’000 – 60,000 – – – 60,000 – 60,000 – –
			60,000 60,000
			–

– 83 –

FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

APPENDIX I

At 31st March, 2002, the Group’s bank loans and overdrafts were repayable as follows:

On demand or within one year More than one year but not exceeding two years More than two years but not exceeding five years Over five years	Group 2002 2001 HK$’000 HK$’000 44,851 429,814 49,877 54,752 275,798 206,734 445,719 221,782 816,245 913,082	Group 2002 2001 HK$’000 HK$’000 44,851 429,814 49,877 54,752 275,798 206,734 445,719 221,782 816,245 913,082
		913,082

The above bank loans and overdrafts were secured by first charges on certain investment properties of the Group, other specified assets of the Group and corporate guarantee from the Company.

23. DEFERRED TAXATION

The potential deferred tax (asset)/liability not provided for in the accounts amounted to:

Accelerated depreciation allowances Tax losses	Group 2002 2001 HK$’000 HK$’000 454 196 (14,146) (16,693 (13,692) (16,497	Group 2002 2001 HK$’000 HK$’000 454 196 (14,146) (16,693 (13,692) (16,497
		(16,497

No recognition for deferred taxation has been made in the accounts as it is uncertain that the deferred tax asset will crystallise in the foreseeable future.

The revaluation of investment properties does not constitute a timing difference for deferred taxation purposes as realisation of the revaluation surplus would not result in a taxation liability.

24. NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT

(a) Reconciliation of loss before taxation to net cash inflow from operating activities

Loss before taxation Share of results of associated companies Loss on disposal of interests in subsidiaries Write down in value of listed securities Revaluation reserve realised upon disposal of properties Interest income Interest expenses Dividends received from quoted investments Unclaimed dividends forfeited Write back of provision for permanent diminution in value of long term investments Depreciation of fixed assets (Gain)/loss on disposal of fixed assets Decrease in properties held for/under development Increase in long term receivable Decrease/(increase) in accounts and other receivables, deposits and prepayments Decrease/(increase) in properties held for sale Decrease in unquoted investment Decrease in accounts payable, deposits received and accrued charges Net cash inflow from operating activities	Group 2002 2001 HK$’000 HK$’000 (164,532) (191,291 (3,044) 18,204 211,755 27 – 333,670 (17,907) (59,195 (12,311) (5,177 31,183 48,454 (2,145) (253 (278) (276 (1,035) – 1,763 6,156 (752) 4,770 – 835,463 (6,774) – 309,452 (469,907 142,193 (371,734 1,517 121 (36,328) (6,586 452,757 142,446	Group 2002 2001 HK$’000 HK$’000 (164,532) (191,291 (3,044) 18,204 211,755 27 – 333,670 (17,907) (59,195 (12,311) (5,177 31,183 48,454 (2,145) (253 (278) (276 (1,035) – 1,763 6,156 (752) 4,770 – 835,463 (6,774) – 309,452 (469,907 142,193 (371,734 1,517 121 (36,328) (6,586 452,757 142,446
		142,446

– 84 –

FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

APPENDIX I

(b) Disposal of subsidiaries

Fixed assets Properties held for/under development Long term investments Accounts and receivables, deposits and prepayments Accounts payable, deposits received and accrued charges Net assets disposed of Goodwill Loss on disposal Consideration Satisfied by: Cash Accounts receivable	Group 2002 2001 HK$’000 HK$’000 – 29,427 506,990 – 423 – 3,134 – (22) – 510,525 29,427 978 – (211,755) (27) 299,748 29,400 291,748 29,400 8,000 – 299,748 29,400

(c) Analysis of changes in financing during the year

Share capital and premium HK$’000 At 1st April, 2000 1,058,472 Bank loans raised – Repayment of bank loans – Contributions from minority shareholders – Interest due to minority shareholders – Revaluation reserve attributable to minority shareholders realised upon disposal of properties – Decrease in bank deposits pledged – Profit for the year attributable to minority shareholders – At 31st March, 2001 1,058,472 Bank loans raised – Repayment of bank loans – Repayment of loans from minority shareholders – Interest due to minority shareholders – Revaluation reserve attributable to minority shareholders realised upon disposal of properties – Profit for the year attributable to minority shareholders – At 31st March, 2002 1,058,472	Bank loans HK$’000 910,539 112,248 (124,580) – – – – – 898,207 248,000 (329,962) – – – – 816,245	Minority interests HK$’000 152,953 – – 26,414 41 (26,638) – 78,721 231,491 – – (125,550) 33 (8,058) 16,928 114,844	Bank deposits pledged for banking facilities HK$’000 56,225 – – – – – (56,225) – – – – – – – – –	Total HK$’000 2,178,189 112,248 (124,580) 26,414 41 (26,638) (56,225) 78,721 2,188,170 248,000 (329,962) (125,550) 33 (8,058) 16,928 1,989,561

* representing non cash transactions.

– 85 –

FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

APPENDIX I

25. CONTINGENT LIABILITIES

		Group		Company
	2002	2001	2002	2001
	HK$’000	HK$’000	HK$’000	HK$’000
Guarantees given to banks in respect of banking
facilities granted to associated companies	–	492,300	–	492,300
Guarantees given to banks in respect of banking
facilities granted to subsidiaries	–	–	287,245	783,003

26. COMMITMENTS

(a) Capital commitments for fixed assets, properties held for/under development and long term investments


	2002	2001
	HK$’000	HK$’000
Contracted but not provided	20,223	10,148

(b) Operating leases

(i) At 31st March, 2002, the Group has future aggregate minimum lease payments payable under non-cancellable operating leases as follows:

Land and buildings Not later than one year Later than one year and not later than five years	Group 2002 2001 HK$’000 HK$’000 2,576 2,576 1,174 3,750 3,750 6,326	Group 2002 2001 HK$’000 HK$’000 2,576 2,576 1,174 3,750 3,750 6,326
		6,326

(ii) At 31st March, 2002, the Group has future aggregate minimum lease payments receivable under non-cancellable operating leases as follows:

Land and buildings Not later than one year Later than one year and not later than five years Later than five years	Group 2002 2001 HK$’000 HK$’000 65,378 68,341 84,576 37,690 7,245 – 157,199 106,031	Group 2002 2001 HK$’000 HK$’000 65,378 68,341 84,576 37,690 7,245 – 157,199 106,031
		106,031

– 86 –

FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

APPENDIX I

27. RELATED PARTY TRANSACTION

During the year, the Group disposed of its entire interest in a subsidiary to its associated company for a total consideration of approximately HK$300 million, which is arrived at after arm’s length negotiations. The associated company is 20% owned by the Group and the remaining 80% interest owned equally by one of the Company’s substantial shareholders and a company controlled by that substantial shareholder.

The Group realised a net loss of approximately HK$211 million on this transaction. In accordance with the sale and purchase agreement, the consideration of the transaction is subject to an upward adjustment of up to HK$200 million and the Group’s interest in the associated company could be increased from 20% to 25% if certain conditions are fulfilled in future. Such amount is not accounted for in the current year profit and loss account as the fulfilment of the relevant conditions is not certain.

28. ULTIMATE HOLDING COMPANY

The directors regard United Goal Development Limited, a company incorporated in the British Virgin Islands, as being the ultimate holding company.

29. PARTICULARS OF PRINCIPAL SUBSIDIARIES

The principal subsidiaries of the Company as at 31st March, 2002 are set out below:

		Particulars of
	Place of	issued share	Percentage		Principal
Name of subsidiary	incorporation	capital	holding		activities
			2002	2001
Shares held directly:
Asean Resources Limited	Hong Kong	5,000 ordinary	100	100	Investment
		shares of			holding
		HK$0.2 each
Shares held indirectly:
15691 Yukon Inc.	Canada	1 common	100	100	Investment
		share of C$1			holding
Asean Resources Finance	Hong Kong	100,000 ordinary	100	100	Provision of
Limited		shares of			financial
		HK$1,000 each			services
Billion Venture Limited	Hong Kong	100 ordinary	100	100	Property
		shares of			investment
		HK$1 each
Broadtrade Investments	Hong Kong	2 ordinary	100	100	Property
Limited		shares of			investment
		HK$1 each
Champion Worldwide	Hong Kong	2 ordinary	100	100	Property
Development Limited		shares of			investment
		HK$1 each
Chesta Limited	Hong Kong	2 ordinary	100	100	Property
		shares of			investment
		HK$1 each
Cityroy (IOM) Limited	Isle of Man	2 ordinary	100	100	Yacht
		shares of			investment
		GBP 1 each
Cityroy Limited	Hong Kong	2 ordinary	100	100	Investment
		shares of			holding
		HK$1 each

– 87 –

FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

APPENDIX I

		Particulars of
	Place of	issued share	Percentage			Principal
Name of subsidiary	incorporation	capital	holding			activities
			2002	2001
Cityscope Limited	Hong Kong	2 ordinary	100	100		Property
		shares of				development
		HK$1 each
Conington Limited	British Virgin	1 ordinary	100	100		Securities
	Islands	share of US$1				dealing
Fitmond Limited	British Virgin	1 ordinary	100	100		Investment
	Islands	share of US$1				holding
Golden Union	Hong Kong	2 ordinary	100	100		Property
Development Limited		shares of				investment
		HK$1 each
Goldyne Holdings	British Virgin	1 ordinary	100	100		Investment
Limited	Islands	share of US$1				holding
Grands Company	Hong Kong	2 ordinary	100	100		Holding of club
Limited		shares of				debenture
		HK$1 each
Grandwoods Limited	British Virgin	1 ordinary	100	100		Renting
	Islands	share of US$1				property
Hin Kei Investment	Hong Kong	10,000 ordinary	100	100		Property
Limited		shares of				development
		HK$1 each
Lipro Prosper Limited	Hong Kong	2 ordinary	100	100		Property
		shares of				investment
		HK$1 each
南華投資股份有限公司	Taiwan	1,000,000	100	100		Investment
		ordinary				holding in
		shares of				Taiwan
		NT$100 each
Regal Trophy Limited	British Virgin	20 ordinary	55		55	Investment
	Islands	shares of				holding
		US$1 each
Starward Limited	British Virgin	1 ordinary	100	100		Investment
	Islands	share of US$1				holding
Sunshine Tower Limited	Hong Kong	10,000,000	100	100		Property
		ordinary				investment
		shares of
		HK$1 each
United Prosper Limited	Hong Kong	2 ordinary	55		–	Provision of
		shares of				loan to
		HK$1 each				property
						purchasers
Verywell Services	Hong Kong	2 ordinary	100	100		Provision of
Limited		shares of				management
		HK$1 each				services

– 88 –

FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

APPENDIX I

		Particulars of
	Place of	issued share	Percentage			Principal
Name of subsidiary	incorporation	capital	holding			activities
			2002	2001
Winning Hong Kong	Hong Kong	2 ordinary	100	100		Investment
Limited		shares of				holding
		HK$1 each
Winsworld Properties	British Virgin	100 ordinary	100	100		Property
Limited	Islands	shares of				investment
		US$1 each
Wisdom Profit	British Virgin	1 ordinary	100		–	Investment
Investments Limited	Islands	share of US$1				holding
Wise Step International	Hong Kong	2 ordinary	100		–	Operation of
Limited		shares of				car park
		HK$1 each
Wiseson Investments	Hong Kong	2 ordinary	100	100		Property
Limited		shares of				investment
		HK$1 each
Wonderlite Investments	British Virgin	1 ordinary	100	100		Securities
Limited	Islands	share of US$1				dealing
World Glory Properties	Hong Kong	2 ordinary	55		55	Property
Limited		shares of				development
		HK$1 each

Except 南華投資股份有限公司 , all the above subsidiaries operate in Hong Kong and are audited by PricewaterhouseCoopers, Hong Kong. The net assets of subsidiary not audited by PricewaterhouseCoopers, Hong Kong amounted to approximately 0.1% of the Group’s net assets.

The above table includes the subsidiaries of the Company which, in the opinion of the directors, principally affected the results of the year or formed a substantial portion of the net assets of the Group. To give details of other subsidiaries would, in the opinion of the directors, result in particulars of excessive length.

30. PARTICULARS OF PRINCIPAL ASSOCIATED COMPANIES

The principal associated companies of the Company as at 31st March, 2002 are set out below:

		Particulars of
Name of	Place of	issued share	Percentage			Principal
associated company	incorporation	capital	holding			activities
			2002	2001
Shares held indirectly:
Broad Reach Company	Hong Kong	100 ordinary	50		50	Property
Limited		shares of				development
		HK$1 each
Chishore Enterprise Inc.	British Virgin	100 ordinary	31		31	Investment
	Islands	shares of				holding
		US$1 each
Fergurson Hotel	Hong Kong	27,500,000	47.7	47.7		Investment
Holdings Limited		ordinary				holding
		shares of
		HK$10 each

– 89 –

FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

APPENDIX I

		Particulars of
Name of	Place of	issued share	Percentage			Principal
associated company	incorporation	capital	holding			activities
			2002	2001
Gold Return Resources	British Virgin	10 ordinary	20		20	Investment
Ltd.	Islands	shares of				holding
		US$1 each
Hotel Nikko Hong Kong	Hong Kong	2 ordinary	47.7	47.7		Hotel
Limited		shares of				ownership
		HK$1 each
New Unity Holdings Ltd.	British Virgin	2 ordinary	50		50	Investment
	Islands	shares of				holding
		US$1 each
Queensway Hotel	Hong Kong	100,000	24.8	24.8		Investment
Holdings Limited		ordinary				holding
		shares of
		HK$10 each
Queensway Hotel Limited	Hong Kong	100,000	24.8	24.8		Hotel
		ordinary				ownership
		shares of
		HK$10 each
Wise Come Development	Hong Kong	30 ordinary	20		–	Investment
Limited		shares of				holding
		HK$1 each

All the above associated companies operate principally in Hong Kong and are audited by PricewaterhouseCoopers, Hong Kong.

The above table includes the associated companies of the Company which, in the opinion of the directors, principally affected the results of the year or formed a substantial portion of the net assets of the Group. To give details of other associated companies would, in the opinion of the directors, result in particulars of excessive length.

31. APPROVAL OF ACCOUNTS

The accounts were approved by the board of directors on 17th July, 2002.

– 90 –

APPENDIX I FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

UNAUDITED INTERIM RESULTS

The following is the unaudited consolidated results of the Asean Resources group for the six months ended 30th September, 2002 extracted from the relevant interim report of Asean Resources.

CONSOLIDATED PROFIT AND LOSS ACCOUNT

For the six months ended 30th September, 2002

Note Turnover 2 Cost of sales Other revenues 2 Administrative expenses Profit from operations 3 Finance costs Share of results of associated companies Profit before taxation Taxation 4 Profit after taxation Minority interests Profit attributable to shareholders Earnings per share 5 – Basic – Diluted	Unaudited Six months ended 30th September, 2002 2001 HK$’000 HK$’000 156,158 204,068 (90,266) (140,993) 65,892 63,075 12,675 7,965 (19,195) (20,433) 59,372 50,607 (11,775) (19,147) (1,586) 6,277 46,011 37,737 (2,144) (264) 43,867 37,473 (12,533) (17,346) 31,334 20,127 2.436 cents 1.565 cents N/A 1.558 cents

– 91 –

FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

APPENDIX I

CONSOLIDATED BALANCE SHEET

As at 30th September, 2002

Unaudited 30th September, Note 2002 HK$’000 Fixed assets 1,932,158 Investments in associated companies 1,024,791 Properties held for/under development 287,868 Long term investments 3,001 Long term receivable 6,758 Current assets Accounts and other receivables, deposits and prepayments 6 161,828 Properties held for sale 133,237 Other investments 2,405 Cash and bank balances 807,097 1,104,567 --------------- Current liabilities Accounts payable, deposits received and accrued charges 7 60,996 Taxation 6,923 Dividend payable 481 Bank loans, secured 8 46,849 115,249 --------------- Net current assets 989,318 --------------- Total assets less current liabilities 4,243,894 Financed by: Share capital 9 128,648 Reserves 3,199,351 Shareholders’ funds 3,327,999 Minority interests 26,351 Bank loans, secured 8 889,544 4,243,894	Audited 31st March, 2002 HK$’000 1,932,936 1,027,265 240,135 3,001 6,774 159,054 229,541 3,847 704,022
	1,096,464 --------------- 65,072 5,723 481 44,851
	116,127 ---------------
	980,337 ---------------
	4,190,448

	128,648 3,175,562
	3,304,210 114,844 771,394
	4,190,448

– 92 –

APPENDIX I FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

For the six months ended 30th September, 2002

Net cash inflow from operating activities Net cash (outflow)/inflow from investing activities Net cash inflow/(outflow) from financing Increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period Analysis of balances of cash and cash equivalents: Cash and bank balances Bank overdrafts	Unaudited Six months ended 30th September, 2002 2001 HK$’000 HK$’000 128,823 544,308 (36,749) 50,262 11,001 (207,926) 103,075 386,644 704,022 44,228 807,097 430,872 807,097 440,652 – (9,780) 807,097 430,872

– 93 –

APPENDIX I FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30th September, 2002

		Unaudited	Unaudited	Unaudited	Unaudited	Unaudited				Total HK$’000 3,304,210
Share capital HK$’000 128,648	Special reserve HK$’000 –	Revaluation reserve – Revaluation properties Revaluation Capital reserve – held for/ reserve – Share redemption investment under other premium reserve properties development properties HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 929,824 129 1,290,289 15,899 348,195					Capital reserve HK$’000 69,992	Exchange reserve HK$’000 (15,559 )	Retained profits HK$’000 536,793
–	–	–	–	–	–	–	–	(875 )	–	(875 )
– – – 128,648	– – – –	– – – 929,824	– – – 129	– – – 1,290,289	– (6,670 ) – 9,229 Unaudited	– – – 348,195	– – – 69,992	(875 ) – – (16,434 )	– – 31,334 568,127	(875 ) (6,670 ) 31,334 3,327,999 Total HK$’000 3,595,177
Share capital HK$’000 128,648	Special reserve HK$’000 435,421	Revaluation reserve – Revaluation properties Revaluation Capital reserve – held for/ reserve – Share redemption investment under other premium reserve properties development properties HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 929,824 129 1,299,455 25,748 433,867					Capital reserve HK$’000 74,153	Exchange reserve HK$’000 (11,759 )	Retained profits HK$’000 279,691
–	–	–	–	–	–	–	–	(3,800 )	–	(3,800 )
– – – – 128,648	– – 980 – 436,401	– – – – 929,824	– – – – 129	– – – – 1,299,455	– (8,838 ) – – 16,910	– – – – 433,867	– – – – 74,153	(3,800 ) – – – (15,559 )	– – – 20,127 299,818	(3,800 ) (8,838 ) 980 20,127 3,603,646

– 94 –

APPENDIX I FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

NOTES TO CONDENSED INTERIM ACCOUNTS

1. Basis of preparation and accounting policies

These unaudited consolidated condensed interim accounts are prepared in accordance with Hong Kong Statement of Standard Accounting Practice (“SSAP”) 25, Interim Financial Reporting, issued by the Hong Kong Society of Accountants.

These condensed accounts should be read in conjunction with the 2002 annual report.

The accounting policies and methods of computation used in the preparation of these condensed accounts are consistent with those used in the annual accounts for the year ended 31st March, 2002 except that the Group has changed certain of its accounting policies following its adoption of the following Statements of Standard Accounting Practice issued by the Hong Kong Society of Accountants which are effective for accounting periods commencing on or after 1st January, 2002:

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 33 : Discontinuing operations SSAP 34 : Employee benefits

Except for the change in presentation resulting for the adoption of SSAP 1 (revised), SSAP 15 (revised) and SSAP 25 (revised), the adoption of the above standards does not have a material effect on the Group’s account.

2. Revenue and turnover

The Group is principally engaged in property development and investment, securities investment and trading and investment holding. Revenues recognised during the period are as follows:

Sale of property interests Rental income Proceeds from securities trading Dividend income from quoted investments Turnover Interest income Other income Other revenues Total revenues	Six months ended 30th September, 2002 2001 HK$’000 HK$’000 115,490 158,230 39,931 45,804 737 – – 34 156,158 204,068 -------------- -------------- 9,278 4,474 3,397 3,491 12,675 7,965 -------------- -------------- 168,833 212,033	Six months ended 30th September, 2002 2001 HK$’000 HK$’000 115,490 158,230 39,931 45,804 737 – – 34 156,158 204,068 -------------- -------------- 9,278 4,474 3,397 3,491 12,675 7,965 -------------- -------------- 168,833 212,033
		204,068 -------------- 4,474 3,491
		7,965 --------------
		212,033

(a) Primary reporting format – business segments

The Group is organised into three main business segments:

Property rental
Property development and investment
Securities investment and trading

Other operations of the Group comprise mainly hotel ownership which is undertaken by certain associated companies.

– 95 –

FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

APPENDIX I

There are no sales or other transactions between the business segments.

Six months Property development Property and rental investment HK$’000 HK$’000 Turnover 39,931 115,490 Segment result 39,099 27,498 Unallocated corporate expenses (net) Interest income Finance costs Share of results of associated companies – (17,514) Profit before taxation Taxation Profit after taxation Minority interests Profit attributable to shareholders	Six months	ended 30th September, 2002 Securities investment Other and trading operations Consolidated HK$’000 HK$’000 HK$’000 737 – 156,158 (705) – 65,892 (15,798) 50,094 9,278 (11,775) – 15,928 (1,586) 46,011 (2,144) 43,867 (12,533) 31,334
		Securities investment and trading HK$’000 737 (705) –

Six months Property development Property and rental investment HK$’000 HK$’000 Turnover 45,804 158,230 Segment result 43,126 40,228 Unallocated corporate expenses (net) Interest income Finance costs Share of results of associated companies – (12) Profit before taxation Taxation Profit after taxation Minority interests Profit attributable to shareholders	Six months	ended 30th September, 2001 Securities investment Other and trading operations Consolidated HK$’000 HK$’000 HK$’000 34 – 204,068 (20,279) – 63,075 (16,942) 46,133 4,474 (19,147) – 6,289 6,277 37,737 (264) 37,473 (17,346) 20,127
		Securities investment and trading HK$’000 34 (20,279) –

(b) No geographical analysis is provided as less than 10% of the consolidated turnover and less than 10% of the consolidated profit from operations of the Group are attributable to markets outside Hong Kong.

– 96 –

FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

APPENDIX I

3. Profit from operations

Profit from operations is stated after crediting and charging the following:

Profit from operations is stated after crediting and charging the following:
Crediting Gain on disposal of fixed assets Charging Staff costs Depreciation of fixed assets Loss on disposal of fixed assets	Six months ended 30th September, 2002 2001 HK$’000 HK$’000 – 215 7,774 9,099 854 897 27 –

		9,099 897 –

4. Taxation

Hong Kong profits tax has been provided at the rate of 16% (2001: 16%) on the estimated assessable profits for the period. Taxation on overseas profit has been calculated on the estimated assessable profit for the period at the rates of taxation prevailing in the countries in which the Group operates.

The amount of taxation charged to the consolidated profit and loss account represents:

Hong Kong profits tax – current Overseas taxation – under provision in prior years Share of taxation attributable to associated companies	Six months ended 30th September, 2002 2001 HK$’000 HK$’000 1,200 – 61 – 1,261 – 883 264 2,144 264	Six months ended 30th September, 2002 2001 HK$’000 HK$’000 1,200 – 61 – 1,261 – 883 264 2,144 264
		– 264
		264

Deferred taxation for the period has not been provided as the effect of the timing differences is immaterial to the Group.

5. Earnings per share

The calculations of the basic and diluted earnings per share are based on the following data:

Earnings Earnings for the purpose of the calculation of basic and diluted earnings per share Number of shares Weighted average number of ordinary shares for the purpose of the calculation of basic earnings per share Effect of dilutive potential ordinary shares – share options Weighted average number of ordinary shares for the purpose of the calculation of diluted earnings per share	Six months ended 30th September, 2002 2001 HK$’000 HK$’000 31,334 20,127 1,286,482,836 1,286,482,836 – 5,169,951 1,286,482,836 1,291,652,787	Six months ended 30th September, 2002 2001 HK$’000 HK$’000 31,334 20,127 1,286,482,836 1,286,482,836 – 5,169,951 1,286,482,836 1,291,652,787

		1,286,482,836 5,169,951
		1,291,652,787

– 97 –

APPENDIX I FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

6. Accounts and other receivables, deposits and prepayments

Included in accounts and other receivables is an amount of HK$105,000,000 which represents a loan to a listed company (“Listco”) in Hong Kong. The loan is unsecured, interest bearing at 1% above Hong Kong dollar prime rate and repayable in full in November 2002. Subsequent to the period end date, the Group entered into a supplemental loan agreement with Listco whereby Listco pledged its entire interest in a subsidiary as security for the loan, and the loan repayment is extended to May 2003. This subsidiary, through its subsidiaries and associated companies, is engaged in property development and investment.

At 30th September, 2002, rental receivable including related interests amounted to HK$7,062,000 (31st March, 2002: HK$8,444,000) and the ageing analysis was as follows:

30th September, 2002 HK$’000 Current 3,046 31 – 60 days 2,026 61 – 90 days 1,803 Over 90 days 187 7,062	31st March, 2002 HK$’000 3,348 2,461 1,618 1,017
	8,444

7. Accounts payable, deposits received and accrued charges

Included in the accounts payable, deposits received and accrued charges are rental deposits, construction costs payable and accruals.

Rental deposits amounting to HK$17,907,000 (31st March, 2002: HK$21,764,000) are repayable when the tenancy contracts lapse.

At 30th September, 2002, the ageing analysis of the construction costs payable were as follows:

30th September, 2002 HK$’000 Current 3 31 – 60 days 9 61 – 90 days 4 16	31st March, 2002 HK$’000 224 – 26
	250

Construction cost accruals, including retention money, amounted to HK$16,934,000 (31st March, 2002: HK$16,576,000) and are payable in accordance with the terms of the construction contracts.

8. Bank loans

30th September, 2002 HK$’000 Secured bank loans – current portion 46,849 – long term portion 889,544 936,393	31st March, 2002 HK$’000 44,851 771,394
	816,245

– 98 –

FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

APPENDIX I

At 30th September, 2002, the Group’s bank loans were repayable as follows:

30th September, 2002 HK$’000 On demand or within one year 46,849 More than one year but not exceeding two years 140,806 More than two years but not exceeding five years 342,328 Over five years 406,410 936,393	31st March, 2002 HK$’000 44,851 49,877 275,798 445,719
	816,245

The above bank loans were secured by first charges on certain investment properties, properties held for/under development, properties held for sale, other specified assets of the Group and corporate guarantee from the Company.

9. Share capital

Number of ordinary shares of HK$0.10 each Authorised: At 1st April, 2002 and 30th September, 2002 2,000,000,000 Issued and fully paid: At 1st April, 2002 and 30th September, 2002 1,286,482,836	Value HK’000 200,000

	128,648

10. Commitments

Capital commitments for fixed assets, properties held for/under development and long term investments

	30th September,	31st March,
	2002	2002
	HK$’000	HK$’000
Contracted but not provided	15,541	20,223

– 99 –

APPENDIX I FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

STATEMENT OF INDEBTEDNESS

As at the close of business on 31st January, 2003, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this circular, the Asean Resources group had outstanding secured bank loans of approximately HK$894 million.

The Asean Resources group’s current banking facilities are secured by legal charges on certain investment properties, properties held for/under development and properties held for sale and other specified assets of the Asean Resources group. The value of the pledged properties according to the valuation by DTZ as at 31st January, 2003 amounted to approximately HK$1,876 million.

Save for aforesaid, the Asean Resources group did not have, at the close of business on 31st January, 2003 any outstanding mortgages, charges, debentures, other loan capital, bank overdrafts, loans or other similar indebtedness, or any hire purchase commitments, or any guarantees or other material contingent liabilities.

Foreign currency amounts have been translated into Hong Kong dollars at the rates of exchange prevailing at the close of business on 31st January, 2003.

The directors have confirmed that there has been no material change in the indebtedness or contingent liabilities of the Asean Resources group since 31st January, 2003.

MATERIAL CHANGE

Save as the group reorganisation and save as disclosed in the section headed “Unaudited pro forma statement of adjusted consolidated net tangible assets of the Asean Resources group”, the directors are not aware of any material adverse change in the financial or trading position of the Asean Resources group since 31st March, 2002, being the date to which the latest audited consolidated financial statements of Asean Resources were made up.

– 100 –

APPENDIX I FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS OF THE ASEAN RESOURCES GROUP

The following is a statement of the unaudited pro forma adjusted consolidated net tangible assets of the Asean Resources group based on the audited consolidated balance sheet of the Asean Resources group as at 31st March, 2002 and adjusted as follows:

Audited consolidated net asset value of the Asean Resources group as per
its consolidated financial statements as at 31st March, 2002
Add:
Unaudited interim results of the Asean Resources group for
the six months ended 30th September, 2002
Less: Revaluation reserve realised upon disposal of properties
during the six months ended 30th September, 2002_(note 1)
Movement in exchange reserve during the six months ended
30th September, 2002(note 2)
_Less: Diminution in the consolidated net tangible asset value of the
Asean Resources group upon completion of
the group reorganisation_(note 3)
_Less: Deficit arising from the revaluation of
property interests_(note 4)
_Less: Consideration for cancellation of share options_(note 5)
Unaudited pro forma adjusted consolidated net tangible asset value
Unaudited pro forma adjusted consolidated net tangible asset value
per Asean Resources share(note 6)_

HK$’000
3,304,210
31,334
(6,670)
(875)
3,327,999
(1,479,160)
(373,238)
(33,344)
1,442,257
HK$1.12

Notes:

The amount represents the revaluation reserve attributable to the properties which had been recognised as profits upon the disposal of such properties during the six months ended 30th September, 2002.
This represents the exchange difference arising from the translation of the financial statements of a foreign subsidiary as at 30th September, 2002.
This represents the unaudited pro forma net asset value of the Besteam group as at 31st March, 2002, which will be distributed in specie to the Asean Resources shareholders, as set out in appendix III to this circular.
The deficit arising from the revaluation of property interests is based on the valuation carried out by independent property valuers, DTZ, on the properties of the Asean Resources group as at 31st December, 2002, assuming the group reorganisation had taken place, on an open market value basis. DTZ has confirmed that there was no material change in the valuation of the properties of the Asean Resources group between 31st December, 2002 and 31st January, 2003. The valuation report from DTZ on the properties of the Asean Resources group as at 31st January, 2003 is set out in appendix V to this circular.
The amount is arrived at based on a cancellation fee of HK$0.32 per share option and 104,200,000 share options outstanding as at 21st February, 2003.
The unaudited pro forma adjusted consolidated net tangible asset value per Asean Resources share is arrived at based on 1,286,482,836 Asean Resources shares in issue as at the latest practicable date.

– 101 –

APPENDIX I FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP

Working capital

The directors are of the opinion that, upon completion of the group reorganisation, and based on available banking and other facilities and internal resources of the Asean Resources group, the Asean Resources group has sufficient working capital for its present requirement.

– 102 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP UPON THE IMPLEMENTATION OF THE GROUP REORGANISATION

APPENDIX II

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP UPON THE IMPLEMENTATION OF THE GROUP REORGANISATION

The unaudited pro forma financial information on the Asean Resources group has been prepared as if the group reorganisation had taken place but before the cash dividend of approximately HK$0.5053 per Asean Resources share, which may or may not be declared. The group reorganisation involves, inter alia, Besteam acquiring a number of intermediate holding companies from Asean Resources, the payment of cash by Besteam to Asean Resources based on the cash position as at the date of completion of the group reorganisation as partial repayment of intercompany balance, and the capitalisation of the remaining intercompany loan balance by issuance of 1,286,482,836 Besteam shares. This has been reflected in the unaudited pro forma financial information as follows:

Besteam was assumed to have been incorporated and have completed the acquisition of the intermediate holding companies from Asean Resources prior to the earliest period presented;
a cash balance of HK$625,309,000 in the Besteam group was deemed to have been transferred to the Asean Resources group at 31st March, 2002 as partial repayment of the intercompany loan balance due from Besteam to Asean Resources. This balance represents the maximum amount that could be transferred from the Besteam group at 31st March, 2002;
the capitalisation of the remaining intercompany loan balance was assumed to have taken place prior to the earliest period presented. The amount deemed to have been capitalised in the unaudited pro forma financial information represents the remaining balance due from Besteam to Asean Resources after taking into account the partial repayment by cash as mentioned in note 2 above, which amounted to HK$429,485,000 as at 31st March, 2002; and
it is also assumed that the distribution in specie of Besteam shares to the Asean Resources shareholders has taken place prior to the earliest period presented.

In addition, for presentational purposes only, dividends of HK$1,300 million and HK$10 million in respect of the years ended 31st March, 2002 and 31st March, 2001 respectively which were declared and paid by a wholly-owned subsidiary of Besteam to Asean Resources were deemed to have been paid prior to the earliest period presented in the unaudited pro forma financial information.

The unaudited pro forma financial information as stated in this appendix is provided for information only and should not be construed as being indicative of the results or financial position for any future period or at any future date. In particular, the amount of cash repayment from the Besteam group and hence capitalisation of the intercompany loan balance at the date of completion of the group reorganisation will be different from the amounts referred to in notes 2 and 3 above. This will in turn affect the value of the distribution in specie of Besteam shares as referred to in note 4 above and the net asset value of the Asean Resources group.

– 103 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE ASEAN RESOURCES GROUP UPON THE IMPLEMENTATION OF THE GROUP REORGANISATION

APPENDIX II

UNAUDITED PRO FORMA COMBINED PROFIT AND LOSS ACCOUNT

UNAUDITED PRO FORMA COMBINED PROFIT AND LOSS ACCOUNT	UNAUDITED PRO FORMA COMBINED PROFIT AND LOSS ACCOUNT	UNAUDITED PRO FORMA COMBINED PROFIT AND LOSS ACCOUNT	UNAUDITED PRO FORMA COMBINED PROFIT AND LOSS ACCOUNT
Year ended 31st March, Notes 2002 2001 2000 HK$’000 HK$’000 HK$’000 Turnover 1 90,789 91,403 87,039 Cost of sales (3,696) (5,196) (3,005) 87,093 86,207 84,034 Other revenues 4,243 5,377 6,683 Administrative expenses (14,989) (14,152) (20,547) Profit from operations 2 76,347 77,432 70,170 Finance costs (29,326) (47,373) (43,122) Profit before taxation 47,021 30,059 27,048 Taxation – – – Profit attributable to Asean Resources shareholders 47,021 30,059 27,048 Earnings per Asean Resources share based on 1,286,482,836 Asean Resources shares in issue 3.66 cents 2.34 cents 2.10 cents UNAUDITED PRO FORMA STATEMENT OF ASSETS AND LIABILITIES As at 31st March, Note 2002 2001 HK$’000 HK$’000 Fixed assets 1,900,014 1,900,016 Current assets Accounts and other receivables, deposits and prepayments 1 16,233 10,895 Amount due from Besteam – 459,333 Cash and bank balances 663,212 30,629 679,445 500,857 Current liabilities Accounts payable, deposits received and accrued charges 24,928 31,416 Dividend payable 481 762 Bank loans, unsecured – 60,000 Bank loans, secured 44,000 50,000 69,409 142,178 Net current assets 610,036 358,679 Total assets less current liabilities 2,510,050 2,258,695 Long term liabilities Bank loans, secured 685,000 476,000 Unaudited pro forma net assets 1,825,050 1,782,695
	16,233 – 663,212		10,895 459,333 30,629
		500,857
	24,928 481 – 44,000		31,416 762 60,000 50,000
		142,178 358,679 2,258,695 476,000 1,782,695

Notes:

The unaudited pro forma financial information of the Asean Resources group and the Besteam group reflect certain transactions or balances which were not previously reflected in the audited financial statements of Asean Resources as they were previously eliminated on consolidation. These include the following:

Rental income charged by the Asean Resources group to the Besteam group of HK$4,503,000 (2001 and 2000: Nil) with corresponding trade balance receivable by the Asean Resources group of HK$1,503,000 (2001 and 2000: Nil). The amount was subsequently settled.
An amount of HK$3,522,000 (2001: HK$2,580,000, 2000: HK$6,086,000) being amount of deficit arising from revaluation of the investment properties of the Besteam group is charged to the unaudited pro forma combined profit and loss account of the Besteam group whereas there were sufficient surpluses, on a portfolio basis, in the consolidated audited financial statements of the Asean Resources group to offset such deficit.

– 104 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE BESTEAM GROUP UPON THE IMPLEMENTATION OF THE GROUP REORGANISATION

APPENDIX III

UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE BESTEAM GROUP UPON THE IMPLEMENTATION OF THE GROUP REORGANISATION

The unaudited pro forma financial information of the Besteam group has been prepared as if the group reorganisation had taken place. The group reorganisation involves, inter alia, Besteam acquiring a number of intermediate holding companies from Asean Resources, the payment of cash by Besteam to Asean Resources based on the cash position as at the date of completion of the group reorganisation as partial repayment of intercompany balance, and the capitalisation of the remaining intercompany loan balance by issuance of 1,286,482,836 Besteam shares. This has been reflected in the unaudited pro forma financial information as follows:

Besteam was assumed to have been incorporated prior to the earliest period presented and that the group structure following the proposed group reorganisation, as a result of acquiring the various intermediate holding companies from Asean Resources, had existed throughout the period presented;
a cash balance of HK$625,309,000 in the Besteam group was deemed to have been transferred to the Asean Resources group at 31st March, 2002 as partial repayment of the intercompany loan balance due from Besteam to Asean Resources. This balance represents the maximum amount that could be transferred to Asean Resources at 31st March, 2002; and
the capitalisation of the remaining intercompany loan balance was assumed to have taken place prior to the earliest period presented. The amount deemed to have been capitalised in the unaudited pro forma financial information represents the remaining balance due from Besteam to Asean Resources after taking into account the partial repayment by cash as mentioned in note 2 above, which amounted to HK$429,485,000 as at 31st March, 2002.

The unaudited pro forma financial information as stated in this appendix is provided for information only and should not be construed as being indicative of the results or financial position for any future period or any future date. In particular, the amount of cash repayment to the Asean Resources group and hence capitalisation of the intercompany loan balance at the date of completion of the group reorganisation will be different from the amounts referred to in notes 2 and 3 above. This will affect the net asset value of the Besteam group.

– 105 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE BESTEAM GROUP UPON THE IMPLEMENTATION OF THE GROUP REORGANISATION

UNAUDITED PRO FORMA COMBINED PROFIT AND LOSS ACCOUNT

Note Turnover 1 Cost of sales Other revenues Administrative expenses (Loss)/profit from operations 2 Finance costs Share of results of associated companies Write down in value of listed securities (Loss)/profit before taxation Taxation (Loss)/profit after taxation Minority interests (Loss)/profit attributable to Besteam shareholders (Loss)/earnings per Besteam share based on 1,286,482,836 Besteam shares in issue	Year ended 31st 2002 2001 HK$’000 HK$’000 528,769 595,385 (712,083) (425,157) (183,314) 170,228 24,334 13,778 (56,909) (53,318) (215,889) 130,688 (2,230) (2,744) 3,044 (18,204) – (333,670) (215,075) (223,930) (1,998) (4,731) (217,073) (228,661) (16,928) (78,721) (234,001) (307,382) (18.19 cents) (23.89 cents)	March, 2000 HK$’000 285,106 (266,864) 18,242 22,108 (44,370) (4,020) (3,922) 78,690 – 70,748 (20,456) 50,292 39 50,331 3.91 cents

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UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE BESTEAM GROUP UPON THE IMPLEMENTATION OF THE GROUP REORGANISATION

APPENDIX III

UNAUDITED PRO FORMA STATEMENT OF ASSETS AND LIABILITIES

As at 31st March, 2002 2001 HK$’000 HK$’000 32,922 39,016 1,027,265 1,212,280 240,135 726,779 3,001 3,424 6,774 – 144,324 449,257 229,541 371,734 3,847 65,151 – 2 40,810 28,474 418,522 914,618 41,647 60,006 5,723 5,723 – 459,333 – 14,875 851 304,939 48,221 844,876 370,301 69,742 1,680,398 2,051,241 114,844 231,491 86,394 7,268 1,479,160 1,812,482	As at 31st March, 2002 2001 HK$’000 HK$’000 32,922 39,016 1,027,265 1,212,280 240,135 726,779 3,001 3,424 6,774 – 144,324 449,257 229,541 371,734 3,847 65,151 – 2 40,810 28,474 418,522 914,618 41,647 60,006 5,723 5,723 – 459,333 – 14,875 851 304,939 48,221 844,876 370,301 69,742 1,680,398 2,051,241 114,844 231,491 86,394 7,268 1,479,160 1,812,482	As at 31st March, 2002 2001 HK$’000 HK$’000 32,922 39,016 1,027,265 1,212,280 240,135 726,779 3,001 3,424 6,774 – 144,324 449,257 229,541 371,734 3,847 65,151 – 2 40,810 28,474 418,522 914,618 41,647 60,006 5,723 5,723 – 459,333 – 14,875 851 304,939 48,221 844,876 370,301 69,742 1,680,398 2,051,241 114,844 231,491 86,394 7,268 1,479,160 1,812,482
144,324 229,541 3,847 – 40,810		449,257 371,734 65,151 2 28,474
	914,618
41,647 5,723 – – 851		60,006 5,723 459,333 14,875 304,939
	844,876 69,742 2,051,241 231,491 7,268 1,812,482

Notes:

Rental income charged by the Asean Resources group to the Besteam group of HK$4,503,000 (2001 and 2000: Nil) with corresponding trade balance payable by the Besteam group of HK$1,503,000 (2001 and 2000: Nil). The amount was subsequently settled.
An amount of HK$3,522,000 (2001: HK$2,580,000, 2000: HK$6,086,000) being amount of deficit arising from revaluation of the investment properties of the Besteam group is charged to the unaudited pro forma combined profit and loss account of the Besteam group whereas there were sufficient surpluses, on a portfolio basis, in the consolidated audited financial statements of the Asean Resources group to offset such deficit.

– 107 –

APPENDIX III UNAUDITED PRO FORMA FINANCIAL INFORMATION ON THE BESTEAM GROUP UPON THE IMPLEMENTATION OF THE GROUP REORGANISATION

UNAUDITED PRO FORMA STATEMENT OF ADJUSTED NET TANGIBLE ASSETS OF THE BESTEAM GROUP

The following is a statement of the unaudited pro forma adjusted net tangible assets of the Besteam group based on the unaudited pro forma statement of assets and liabilities of the Besteam group as at 31st March, 2002 and adjusted as follows:

Unaudited pro forma net asset value of the Besteam group as per its unaudited pro forma statement of assets and liabilities as at 31st March, 2002 Less: Pro forma deficit arising from the revaluation of property interests_(Note 1) Unaudited pro forma adjusted net tangible asset value Unaudited pro forma adjusted net tangible asset value per Besteam share(Note 2) _Notes:	HK$’000 1,479,160 (181,400) 1,297,760 HK$1.01

The pro forma deficit arising from the revaluation of property interests is based on the valuation carried out by independent property valuers, DTZ, on the properties of the Besteam group as at 31st December, 2002, assuming the group reorganisation had taken place, on an open market value basis. DTZ has confirmed that there was no material change in the valuation of the properties of the Besteam group between 31st December, 2002 and 31st January, 2003. The valuation report from DTZ on the properties of the Besteam group as at 31st January, 2003 is set out in appendix VI to this circular.
The unaudited pro forma adjusted net tangible asset value per Besteam share is arrived at based on the assumption that 1,286,482,836 Besteam shares were in issue as at the latest practicable date.

– 108 –

LETTERS FROM PRICEWATERHOUSECOOPERS AND ANGLO CHINESE

APPENDIX IV

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PricewaterhouseCoopers 22nd Floor Prince’s Building Central Hong Kong Telephone (852) 2289 8888 Facsimile (852) 2810 9888

The Directors Asean Resources Holdings Limited 39th Floor, New World Tower I 18 Queen’s Road Central Hong Kong

10th April, 2003

Dear Sirs,

We have performed the procedures below in connection with the financial information under the heading “Unaudited pro forma financial information on the Asean Resources group upon the implementation of the group reorganisation” and “Unaudited pro forma financial information on the Besteam group upon the implementation of the group reorganisation” (the “Financial Information”) as set out on pages 103 to 104 and pages 105 to 107 respectively of the circular dated 10th April, 2003 on “Group Reorganisation, Amendments to the bye-laws, Signing of the Management Contract (Special Deal), Cancellation of the Share Options in Asean Resources and Extension of the Option Period”. The Financial Information comprises the unaudited pro forma combined profit and loss accounts and statements of assets and liabilities of the Asean Resources group and the Besteam group upon the implementation of the group reorganisation.

The preparation of the Financial Information is solely the responsibility of the directors of Asean Resources (the “Directors”). Our responsibility is to report on the results of our procedures.

Our procedures consisted of the following:

(a) Enquiries of the Directors as to the accounting policies based on which the Financial Information have been prepared;
(b) A comparison of the accounting policies based on which the Financial Information has been prepared with those adopted in the preparation of the audited financial statements of Asean Resources Holdings Limited and its subsidiaries (the “Group”) for the year ended 31st March, 2002; and
(c) a check of the arithmetic calculation relating to the financial figures based on which the Financial Information is prepared.

The above procedures do not constitute an audit or a review performed in accordance with auditing standards generally accepted in Hong Kong and, accordingly, we do not express an audit or a review opinion on the Financial Information.

Based on our procedures, so far as the accounting policies and calculations are concerned, the Financial Information has been compiled on a basis consistent, in all material respects, with accounting policies adopted by the Group as set out in the audited annual accounts of the Group for the year ended 31st March, 2002.

Yours faithfully, PricewaterhouseCoopers Certified Public Accountants Hong Kong

– 109 –

LETTERS FROM PRICEWATERHOUSECOOPERS AND ANGLO CHINESE

APPENDIX IV

CORPORATE FINANCE, LIMITED

The directors Asean Resources Holdings Limited Hong Kong

10th April, 2003

Dear Sirs,

We refer to the unaudited financial information of Asean Resources Holdings Limited and its subsidiaries contained in the appendix II headed “Unaudited pro forma financial information on the Asean Resources group upon the implementation of the group reorganisation” and the unaudited financial information of Besteam Limited and its subsidiaries contained in the appendix III headed “Unaudited pro forma financial information on the Besteam group upon the implementation of the group reorganisation” for this circular dated 10th April, 2003 of which this letter forms part.

We have discussed with you the basis upon which the unaudited pro forma financial information have been made. We have also considered the letter dated 10th April, 2003 addressed to the directors of Asean Resources Holdings Limited from PricewaterhouseCoopers relating to the accounting policies and calculations upon which the unaudited pro forma financial information have been made.

On the basis adopted by you and the procedures performed by PricewaterhouseCoopers, we are of the opinion that the unaudited pro forma financial information for which the directors of Asean Resources Holdings Limited and Besteam Limited are solely responsible, have been prepared after due and careful consideration.

Yours faithfully, for and on behalf of

Anglo Chinese Corporate Finance, Limited

Stephen Clark Managing Director

– 110 –

PROPERTY VALUATION ON THE ASEAN RESOURCES GROUP

APPENDIX V

Set out below are the texts of the letter and valuation certificate received from DTZ Debenham Tie Leung Limited, independent property valuers, in connection with their valuation as at 31st January, 2003 of the property interest of Asean Resources excluding Besteam group (on pro forma basis).

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10th April, 2003

The Directors Asean Resources Holdings Limited 39th Floor, New World Tower I 18 Queen’s Road Central Hong Kong

Dear Sirs,

Re: The Non-Domestic Accommodation on the Ground to 6th Floors of the Podium and the Outer Walls and Canopies of the Podium, Multi-Storey Car Park including all spaces therein, the Roof and Walls thereof, Elizabeth House, 250-254 Gloucester Road, Causeway Bay, Hong Kong.

We refer to your instructions for us to value the captioned property interest in which Asean Resources Holdings Limited (the “Company”) has interest. We confirm that we have carried out inspections, made relevant enquiries and searches and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the value of the property as at 31st January, 2003 (the “date of valuation”).

Our valuation of the property represents its open market value which we would define as intended to mean “an opinion of the best price at which the sale of an interest in property would 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 the 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 the date of valuation;
(d) that no account is taken of any additional bid by a prospective purchaser with the special interest; and
(e) that both parties to the transaction had acted knowledgeably, prudently and without compulsion.”

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PROPERTY VALUATION ON THE ASEAN RESOURCES GROUP

APPENDIX V

Our valuation has been made on the assumption that the owner sells the property on the open market without the benefit of a deferred term contract, a leaseback, a joint venture, a management agreement or any similar arrangements which could serve to affect the value of the property.

The property has been valued on an open market basis using the direct comparison method or where appropriate on the basis of capitalisation of the net rental incomes derived from existing tenancies with due provision for the reversionary income potential of the property.

We have relied to a considerable extent on the information provided by you and have accepted advice given to us on such matters as statutory notices, easements, town planning provisions, tenure, identification of property, particulars of occupancy, lettings, rentals, floor plans, floor areas, number of parking spaces and all other relevant matters. Dimensions, measurements and areas included in the valuation certificate are based on information contained in the documents provided to us and are therefore only approximations. We have had no reason to doubt the truth and accuracy of the information provided to us by you which are material to the valuations. We were also advised by you that no material facts have been omitted from the information supplied.

We have not been provided with copies of the title documents relating to the property but we have caused searches to be made at the Urban Land Registry. However, we have not searched the original documents to verify ownership or to verify any lease amendments. All documents and leases have been used for reference only and all dimensions, measurements and areas are approximate.

We have inspected the exterior of the property. However, no structural survey has been made, but in the course of our inspection, we did not note any serious defects. We are not, however, able to report whether the property is free of rot, infestation or any other structural defects. No test was carried out on any of the services.

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

Our valuation certificate is attached.

Yours faithfully, for and on behalf of

DTZ Debenham Tie Leung Limited

K.B. Wong Registered Professional Surveyor (General Practice Division)

M.R.I.C.S., M.H.K.I.S. Director

Note : Mr. K.B. Wong is a chartered surveyor who has over 18 years’ experience in the valuation of properties in Hong Kong.

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PROPERTY VALUATION ON THE ASEAN RESOURCES GROUP

APPENDIX V

VALUATION CERTIFICATE

Property

Description and tenure

Particulars of occupancy

Capital value in existing state as at 31st January, 2003

The Non-Domestic The property comprises the Accommodation on the 7-storey commercial podium, Ground to 6th Floors of the various advertising signages Podium and the Outer Walls on the exterior walls, roof and and Canopies of the Podium, canopies of the podium plus Multi-Storey Car Park 177 car parking spaces. The including all spaces therein, development was completed in the Roof and Walls thereof, 1978. Elizabeth House, 250-254 Gloucester Road, Causeway The property has a total gross Bay, Hong Kong floor area of approximately 21,803.42 sq.m. (234,692 4552/11616th shares of and sq.ft.) excluding the car in the Remaining Portion of parking spaces, advertising Section A of Inland Lot signages, roof and canopies areas.

The property comprises the 7-storey commercial podium, various advertising signages on the exterior walls, roof and canopies of the podium plus 177 car parking spaces. The development was completed in 1978.

4552/11616th shares of and in the Remaining Portion of Section A of Inland Lot No. 2833, the Remaining Portion of Section B and Section D of Inland Lot No. 2835 and the Remaining Portion of Inland Lot No. 6303

The property is held from the Government for respective terms of 99 years renewable for further terms of 99 years commencing from 15th April, 1929 and 25th May, 1929 in respect of Inland Lot Nos. 2833 and 2835 respectively and 75 years renewable for a further term of 75 years commencing from 18th October, 1947 in respect of Inland Lot No. 6303. The current aggregate Government rent payable for the whole lots is HK$1,744 per annum.

As at the date of valuation, HK$1,530,000,000 except Units G25, G32, G33, G34, G39, G40, 5th Floor and 602 having a total gross floor area of approximately 4,103.12 sq.m. (44,166 sq.ft.) which were vacant, the remainder of the shopping arcade and all the signages was let to various tenants for various terms with the latest term due to expire in April 2008 at a total monthly rent of about HK$5,930,000, exclusive of rates and management fees.

The car parking spaces were let for a term of 2 years from 1st October, 2001 to 30th September, 2003 at a monthly rent of HK$750,000.

Notes:

(1) The registered owner of the property is Winsworld Properties Limited, an indirect wholly-owned subsidiary of the Company.

(2) The property is subject to a mortgage and an assignment of rentals both in favour of The Hongkong and Shanghai Banking Corporation Limited.

– 113 –

PROPERTY VALUATION ON THE BESTEAM GROUP

APPENDIX VI

Set out below are the texts of the letter, summary of valuations and valuation certificate received from DTZ Debenham Tie Leung Limited, independent property valuers, in connection with their valuations as at 31st January, 2003 of the property interests of Besteam group (on pro forma basis).

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10th April, 2003

The Directors Asean Resources Holdings Limited 39th Floor, New World Tower I 18 Queen’s Road Central Hong Kong

Dear Sirs,

We refer to your instructions for us to value the property interests contained in the attached summary of valuations in which Asean Resources Holdings Limited (the “Company”) or its subsidiaries or associated companies (together referred to as the “Group”) have interests in Hong Kong and in the People’s Republic of China (the “PRC”), which are to be transferred to Besteam Limited and its subsidiaries after implementation of the group reorganisation. We confirm that we have carried out inspections, made relevant enquiries and searches and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the values of these properties as at 31st January, 2003 (the “date of valuation”).

Our valuation of each of the properties represents its open market value which we would define as intended to mean “an opinion of the best price at which the sale of an interest in property would 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 the 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 the date of valuation;
(d) that no account is taken of any additional bid by a prospective purchaser with the special interest; and
(e) that both parties to the transaction had acted knowledgeably, prudently and without compulsion.”

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PROPERTY VALUATION ON THE BESTEAM GROUP

APPENDIX VI

Our valuations have been made on the assumption that the owners sell the properties on the open market without the benefit of deferred term contracts, leasebacks or any similar arrangements which could serve to affect the values of the properties.

In valuing the properties in Hong Kong the Government Leases of which expired before 30th June, 1997, we have taken into account that under the provisions contained in Annex III of the Joint Declaration of the Government of the United Kingdom and the Government of the People’s Republic of China on the Question of Hong Kong as well as in the New Territories Leases (Extension) Ordinance such leases have been extended without premium until 30th June, 2047 and that rents of three per cent. of the rateable value are charged per annum from the date of extension.

In valuing the property in the PRC, we have assumed that the grantee or the user of the property has free and uninterrupted rights to use or to assign the property for the whole of the unexpired term as granted. We have relied on the advice given by the Group and it’s PRC legal adviser, Commerce & Finance Law Offices, regarding the title to the property and the Group’s interest in the property.

Except otherwise stated, the properties have been valued on an open market basis using the direct comparison method or where appropriate on the basis of capitalisation of the net rental incomes derived from existing tenancies with due provision for the reversionary income potential of the properties.

Each of Property Nos. 7 and 8 has been valued as a fully operational entity having regard to the trading accounts of the property and based on our opinion as to the future trading potential and level of turnover likely to be achieved.

We have relied to a considerable extent on the information provided by the Group and have accepted advice given to us on such matters as statutory notices, easements, town planning provisions, basic terms of proposed lease modification, tenure, identification of properties, particulars of occupancy, lettings, rentals, trading accounts, number of guest rooms, floor plans, floor areas, site areas, number of parking spaces, construction cost expended, interest attributable to the Group and all other relevant matters. Dimensions, measurements and areas included in the valuation certificate are based on information contained in the documents provided to us and are therefore only approximations. We have had no reason to doubt the truth and accuracy of the information provided to us by the Group or its legal adviser which are material to the valuations. We were also advised by the Group or its legal adviser that no material facts have been omitted from the information supplied.

In respect of the properties in Hong Kong, we have not been provided with copies of the title documents relating to the properties but have caused searches to be made at the appropriate Land Registries in respect of the properties situated in Hong Kong.

In respect of the property in the PRC, we have been provided with copies of title documents. However, we have not carried out searches in the PRC and have not searched the original documents to verify ownership or to verify any lease amendments for all properties in Hong Kong and the PRC. All documents and leases have been used for reference only and all dimensions, measurements and areas are approximate.

– 115 –

PROPERTY VALUATION ON THE BESTEAM GROUP

APPENDIX VI

We have inspected the exterior and, where possible, the interior of the properties. However, no structural survey has been made, but in the course of our inspections, we did not note any serious defects. We are not, however, able to report whether the properties are free of rot, infestation or any other structural defects. No test was carried out on any of the services. Moreover, we have not carried out any soil or site investigation. In undertaking our valuations, we have assumed that the properties are suitable for the respective developments as proposed by the Group and no extraordinary costs or delays will be incurred during construction.

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

Unless otherwise stated, all money amounts stated herein are in Hong Kong Dollars. The exchange rates adopted in our valuations of the properties in the PRC are US$1 = HK$7.8 and HK$1 = RMB1.06 which are the approximate prevailing exchange rates as at the date of valuation and there has been no significant fluctuation in the said exchange rates between that date and the date of this letter.

Our valuations are summarized below and the valuation certificates are attached.

Yours faithfully, for and on behalf of

DTZ Debenham Tie Leung Limited K.B. Wong Registered Professional Surveyor (General Practice Division) M.R.I.C.S., M.H.K.I.S. Director

Note: Mr. K.B. Wong is a chartered surveyor who has over 18 years’ experience in the valuation of properties in Hong Kong and over 10 years’ experience in the valuation of properties in the PRC.

– 116 –

PROPERTY VALUATION ON THE BESTEAM GROUP

APPENDIX VI

SUMMARY OF VALUATIONS

				Capital value in
				existing state
				attributable to
		Capital value in	Interest	the Group as at
		existing state as at	attributable	31st January,
	Property	31st January, 2003	to the Group	2003
		HK$	%	HK$
Group I – Property held by the Group for sale in Hong Kong
1.	6 domestic units and	113,000,000	55	62,150,000
	6 car parking spaces of
	The Colonnade,
	152 Tai Hang Road,
	Jardine’s Lookout,
	Hong Kong
			Sub-total:	62,150,000
Group II – Properties held by the Group for investment purpose in Hong Kong
2.	Flats B and C on Ground Floor,	7,570,000	100	7,570,000
	Flat A on 2nd Floor,
	Flat B on 3rd Floor and
	Flat D on 4th Floor,
	48 Caine Road,
	Mid-Levels,
	Hong Kong
3.	Unit B1 on 11th Floor and	2,900,000	100	2,900,000
	Unit A1 on 12th Floor,
	Blue Box Factory Building,
	25 Hing Wo Street,
	Aberdeen,
	Hong Kong
4.	Roof and 2 Side Lanes,	320,000	100	320,000
	Nan Fung Industrial Building,
	15-17 Chong Yip Street,
	Kwun Tong,
	Kowloon

– 117 –

PROPERTY VALUATION ON THE BESTEAM GROUP

APPENDIX VI

				Capital value in	Capital value in
				existing state
				attributable to
		Capital value in	Interest	the Group as at
		existing state as at	attributable	31st	January,
	Property	31st January, 2003	to the Group		2003
		HK$	%		HK$
5.	Shops A, B and H and Shop C	5,600,000	100		5,600,000
	and Toilet No. 1 on
	Ground Floor, Block 2,
	Hoi Sing Building,
	128 Second Street,
	Sai Ying Pun,
	Hong Kong
6.	Flat C4 on 8th Floor,	2,000,000	100		2,000,000
	Block C,
	Elizabeth House,
	250-254 Gloucester Road,
	Causeway Bay,
	Hong Kong
7.	Hotel Nikko Hongkong,	1,604,000,000	47.725	765,509,000
	72 Mody Road,
	Tsim Sha Tsui East,
	Kowloon
8.	JW Marriott Hotel Hong Kong,	2,700,000,000	24.817	670,059,000
	Pacific Place Phase I,
	88 Queensway,
	Admiralty,
	Hong Kong
			Sub-total:	1,453,958,000
Group III – Properties held by the Group for or under development in Hong				Kong
9.	Fanling Sheung Shui Town	260,000,000	20	52,000,000
	Lot No. 182 and various
	agricultural lots in
	Demarcation District No. 51,
	Wu Nga Lok Yeung,
	Fanling,
	New Territories

– 118 –

PROPERTY VALUATION ON THE BESTEAM GROUP

APPENDIX VI

					Capital value in
					existing state
					attributable to
			Capital value in	Interest	the Group as at
			existing state as at	attributable	31st January,
	Property	31st January, 2003		to the Group	2003
			HK$	%	HK$
10.	The Remaining Portions of		8,000,000	100	8,000,000
	Sections A and B of
	Lot No. 2744 in
	Demarcation District No. 124,
	Tan Kwai Tsuen,
	Yuen Long,
	New Territories
11.	Rural Building Lot No. 1161,		390,000,000	57	222,300,000
	33 and 35 Island Road,
	Deep Water Bay,
	Hong Kong
12.	21 Luk Hop Street,		14,000,000	50	7,000,000
	San Po Kong,
	Kowloon
13.	Various agricultural and building		179,000,000	14	25,060,000
	lots in Demarcation District
	Nos. 227 and 229,
	Tai Po Tsai,
	Sai Kung,
	New Territories
				Sub-total:	314,360,000
Group IV – Property held by the Group for investment purpose in the PRC
14.	House No. 2B, Phase 1,		4,750,000	100	4,750,000
	Beijing Riviera,
	1 Xiang Jiang North Road,
	Chaoyang District,
	Beijing
				Sub-total:	4,750,000
				Grand Total:	1,835,218,000

– 119 –

PROPERTY VALUATION ON THE BESTEAM GROUP

APPENDIX VI

VALUATION CERTIFICATE

Group I – Property held by the Group for sale in Hong Kong

Property

Description and tenure

Particulars of occupancy

Capital value in existing state as at 31st January, 2003

6 domestic units and The property comprises 6 6 car parking spaces of domestic units and 6 car parking The Colonnade, spaces of a 30-storey residential 152 Tai Hang Road, building erected upon a 5-storey Jardine’s Lookout, carpark/club house podium Hong Kong completed in 2001. 1005/10359th shares of and The property has a total gross in Section A of Inland Lot floor area of approximately No. 2478 1,208.01 sq.m. (13,003 sq.ft.), excluding the car parking spaces.

The property is held from the Government for a term of 75 years commencing from 30th June, 1924 renewable for a further term of 75 years. The current Government rent payable for the property is HK$116,136 per annum.

Four domestic units HK$113,000,000 having a total gross floor area of (55% interest approximately 788.83 attributable to the sq.m. (8,491 sq.ft.) and Group: four car parking spaces HK$62,150,000) are currently vacant whilst the remainder of the property is currently let for terms of 2 years with the latest term due to expire in March 2004 at a total monthly rent of HK$180,000.

Notes:

(1) The property comprises Flat A on 21st, 25th, 27th, 31st and 32nd Floors, Flat B on 27th Floor, Car Parking Space Nos. 1, 5, 6, 11 and 16 on 1st Basement Floor and Car Parking Space No. 5 on 2nd Basement Floor.
(2) The registered owner of the property is World Glory Properties Limited, an indirect 55% owned subsidiary of the Company.
(3) The domestic units are subject to a mortgage in favour of Liu Chong Hing Bank Limited.
(4) As advised by the Group, the registered owner entered into a preliminary agreement for sale and purchase on 13th March, 2003 to sell Flat B on 27th Floor and Car Parking Space No. 5 on 1st Basement Floor at a consideration of HK$16,380,000.

– 120 –

PROPERTY VALUATION ON THE BESTEAM GROUP

APPENDIX VI

VALUATION CERTIFICATE

Group II – Properties held by the Group for investment purpose in Hong Kong

Property

Description and tenure

Particulars of occupancy

Capital value in existing state as at 31st January, 2003

Flats B and C on The property comprises 2 shop Flats B and C on the HK$7,570,000 Ground Floor, units on the ground floor and 3 ground floor are Flat A on 2nd Floor, domestic units on the 2nd, 3rd currently let for a term Flat B on 3rd Floor and and 4th floors of a 6-storey of 2 years from 1st Flat D on 4th Floor, composite building completed in February, 2002 to 31st 48 Caine Road, about 1958. January, 2004 at a Mid-Levels, monthly rent of Hong Kong The shop units have a total HK$20,000 whilst the saleable area of approximately domestic units are 5/23rd shares of and in 119.84 sq.m. (1,290 sq.ft.). The currently let for various Sub-section 3 of Section A domestic units have a total terms with the latest of Inland Lot No. 150 saleable area of approximately term due to expire in 141.12 sq.m. (1,519 sq.ft.). February 2004 at a total monthly rent of The property is held from the HK$24,000, all Government for a term of 999 inclusive of rates and years commencing from 1st management fees. February, 1855. The current Government rent payable for the lot is HK$8 per annum.

Notes:

(1) The registered owner of Flats B and C on Ground Floor is Broadtrade Investments Limited, an indirect wholly-owned subsidiary of the Company.
(2) The registered owner of Flat A on 2nd Floor, Flat B on 3rd Floor and Flat D on 4th Floor is Golden Union Development Limited, an indirect wholly-owned subsidiary of the Company.

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				Capital value in
			Particulars	existing state as at
	Property	Description and tenure	of occupancy	31st January, 2003
3.	Unit B1 on 11th Floor	The property comprises 2 factory	The property is	HK$2,900,000
	and Unit A1 on	units on the 11th and 12th floors	currently vacant.
	12th Floor,	of a 16-storey factory building
	Blue Box Factory Building,	completed in 1974.
	25 Hing Wo Street,
	Aberdeen,	The property has a total saleable
	Hong Kong	area of approximately
		798.59 sq.m. (8,596 sq.ft.).
	46/1414th shares of and in
	Aberdeen Inland Lot No.	The property is held from the
	306	Government for a term of 75
		years renewable for a further
		term of 75 years commencing
		from 23rd March, 1970. The
		current Government rent payable
		for the whole lot is HK$630 per
		annum.

Notes:

(1) The registered owner of Unit B1 on 11th Floor is Champion Worldwide Development Limited, an indirect wholly-owned subsidiary of the Company.
(2) The registered owner of Unit A1 on 12th Floor is Billion Venture Limited, an indirect wholly-owned subsidiary of the Company.

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VALUATION CERTIFICATE

Capital value in Particulars existing state as at Property Description and tenure of occupancy 31st January, 2003 4. Roof and 2 Side Lanes, The property comprises the roof The property is HK$320,000 Nan Fung Industrial and 2 side lanes of a 10-storey currently let for a term Building, industrial building completed in of 10 years from 1st 15-17 Chong Yip Street, 1968. June, 2001 to 31st Kwun Tong, May, 2011 at a Kowloon The roof has an area of monthly rent of approximately 1,505.11 sq.m. HK$450. 1/21st share of and in Kwun (16,201 sq.ft.). Tong Inland Lot Nos. 442 and 443 The property is held from the Government for terms of 99 years less the last 3 days commencing from 1st July, 1898 which have been statutorily extended until 30th June, 2047. The current Government rent payable for the property is an amount equal to 3% of the rateable value for the time being of the property per annum.

Note: The registered owner of the property is Peace Mansion Limited, an indirect wholly-owned subsidiary of the Company.

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VALUATION CERTIFICATE

Property

Shops A, B and H and Shop C and Toilet No. 1 on Ground Floor, Block 2, Hoi Sing Building, 128 Second Street, Sai Ying Pun, Hong Kong

Capital value in Particulars of existing state as at Description and tenure occupancy 31st January, 2003 The property comprises 4 shop The property is HK$5,600,000 units and a toilet on the ground currently vacant. floor of a 24-storey composite building completed in 1993.

The property has a total saleable area of approximately 208.19 sq.m. (2,241 sq.ft.).

320/3900th shares of and in the Remaining Portions of Sub-sections 1 of Sections D, E, F and G of Inland Lot No. 816 and the Remaining Portions of Sections H, I, J and K of Inland Lot No. 816

The property is held from the Government for a term of 999 years commencing from 13th February, 1880. The current Government rents payable for the lots are as follows:–

Lot	No.		Government
			rent
			HK$ per
			annum
I.L.	816	s.D ss. 1	8
I.L.	816	s.E ss. 1	8
I.L.	816	s.F ss. 1	8
I.L.	816	s.G ss. 1	7
I.L.	816	s.H R.P.	8
I.L.	816	s.I	18
I.L.	816	s.J	18
I.L.	816	s.K	18

Notes:

(1) The registered owner of the property is Wiseson Investments Limited, an indirect wholly-owned subsidiary of the Company.
(2) The property is subject to a charge to secure general banking facilities in favour of Bank of China (Hong Kong) Limited (formerly known as The Kwangtung Provincial Bank).

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VALUATION CERTIFICATE

Capital value in Particulars of existing state as at Property Description and tenure occupancy 31st January, 2003 6. Flat C4 on 8th Floor, The property comprises a The property is HK$2,000,000 Block C, Elizabeth House, domestic unit on the 8th floor of currently let on a 250-254 Gloucester Road, a 22-storey residential block monthly term at a Causeway Bay, completed in 1978. monthly rent of Hong Kong HK$17,644, inclusive The property has a gross floor of rates and 17/11616th shares of and in area of approximately 74.51 management fee. the Remaining Portion of sq.m. (802 sq.ft.). Section A of Inland Lot No. 2833, the Remaining The property is held from the Portion of Section B and Government for terms of 99 Section D of Inland Lot No. years renewable for further terms 2835 and the Remaining of 99 years commencing from Portion of Inland Lot No. 15th April, 1929 and 25th May, 6303 1929 in respect of Inland Lot Nos. 2833 and 2835 respectively and 75 years renewable for a further term of 75 years commencing from 18th October, 1947 in respect of Inland Lot No. 6303. The current aggregate Government rent payable for the whole lots is HK$1,744 per annum.

Note: The registered owner of the property is Sunshine Tower Limited, an indirect wholly-owned subsidiary of the Company.

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VALUATION CERTIFICATE

Property

Description and tenure

Particulars of occupancy

Capital value in existing state as at 31st January, 2003

Hotel Nikko Hongkong, The property comprises a 72 Mody Road, 16-storey plus two basement Tsim Sha Tsui East, levels hotel providing 463 guest Kowloon rooms, function room, ballroom, lounge, cafe, restaurant, hotel’s Kowloon Inland Lot No. administration offices and 62 car 10729 parking spaces. The hotel was completed in 1988.

The hotel has a total gross floor area of approximately 34,568.93 sq.m. (372,100 sq.ft.) of which 9,683.02 sq.m. (104,228 sq.ft.) is for non-domestic use whilst 24,885.92 sq.m. (267,872 sq.ft.) is for domestic use.

The property is HK$1,604,000,000 currently operated as a hotel with retail (47.725% interest facilities. The shop attributable to the units are currently let Group: for various terms with HK$765,509,000) the latest term due to expire in August 2004 at a total monthly rent of HK$98,249.

The registered site area of the property is approximately 2,850 sq.m. (30,677.40 sq.ft.).

The property is held from the Government for a term of 75 years renewable for a further term of 75 years commencing from 28th November, 1984. The current Government rent payable for the lot is HK$1,000 per annum.

Notes:

(1) The registered owner of the property is Hotel Nikko Hong Kong Limited, an indirect 47.725% owned associated company of the Company.
(2) The property is currently being operated as a hotel subject to a management contract in favour of JAL Hotels Company Limited.
(3) The property is subject to an agreement of right of first refusal in favour of JAL Hotels Company Limited.
(4) The property is subject to a debenture and mortgage in favour of The Hongkong and Shanghai Banking Corporation Limited.

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PROPERTY VALUATION ON THE BESTEAM GROUP

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VALUATION CERTIFICATE

				Capital value in
			Particulars of	existing state as at
	Property	Description and tenure	occupancy	31st January, 2003
8.	JW Marriott Hotel Hong	The property comprises the hotel	The property is	HK$2,700,000,000
	Kong,	portion of part of the 42-storey	currently operated as a
	Pacific Place Phase I,	hotel/service apartment block	hotel.	(24.817% interest
	88 Queensway,	erected over a mega commercial/		attributable to the
	Admiralty,	car parking complex podium		Group:
	Hong Kong	which is well connected with		HK$670,059,000)
		neighbouring commercial
	Portion of Inland Lot No.	buildings. The hotel provides
	8571	602 guest rooms, function
		rooms, ballrooms, lounges, cafe/
		bars, an outdoor swimming pool,
		a health club, a business centre,
		a gift shop, executive offices and
		back-of-the-house offices. The
		hotel was completed in 1988.
		The hotel has a total area of
		approximately 51,264.03 sq.m.
		(551,806 sq.ft.).
		The property is held from the
		Government for a term of 75
		years renewable for a further
		term of 75 years commencing
		from 18th April, 1985. The
		current Government rent payable
		for the lot is HK$1,000 per
		annum.

Notes:

(1) The registered owner of the property is Queensway Hotel Limited, an indirect 24.817% owned associated company of the Company.
(2) The property is subject to a legal charge in favour of Standard Chartered Bank, “The Agent”.
(3) The property is currently being operated as a hotel subject to a management contract in favour of Marriott Hong Kong Limited.

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VALUATION CERTIFICATE

Group III – Properties held by the Group for or under development in Hong Kong

Property Description and tenure 9. Fanling Sheung Shui The property comprises a Town Lot No. 182 and building lot (FSSTL 182) and various agricultural lots in various agricultural lots in Wu Demarcation District No. 51, Nga Lok Yeung within Fanling Wu Nga Lok Yeung, District. Fanling, New Territories FSSTL 182 has a registered site area of approximately 32,723 sq.m. (352,230 sq.ft.). The remaining agricultural lots have a total registered site area of approximately 30,846.67 sq.m. (332,034 sq.ft.). FSSTL 182 is held from the Government for a term commencing from 21st June, 1997 and expiring on 30th June, 2047. The remaining agricultural lots are held from the Government for a term of 75 years renewable for a further term of 24 years less the last 3 days commencing from 1st July, 1898 which has been statutorily extended until 30th June, 2047. The current Government rent payable for the property is an amount equal to 3% of the rateable value for the time being of the property per annum.

Particulars of occupancy The property is currently vacant.

Capital value in existing state as at 31st January, 2003

HK$260,000,000

(20% interest attributable to the Group: HK$52,000,000)

Notes:

(1) The agricultural lots comprise Lot Nos. 609, 610, 620, 626-628, 629 R.P., 633 R.P., 634-640, 641 R.P., 642, 646 R.P., 647 R.P., 648 R.P., 650 R.P., 651 R.P., 652-654, 2018 s.B, 2019 s.A & R.P., 2020-2024, 20312033, 2069 R.P., 2077-2079, 2081 and 4644 in Demarcation District No. 51.
(2) The registered owner of Fanling Sheung Shui Town Lot No. 182 is Sun Prosper Company Limited, an indirect 20% owned associated company of the Company. The registered owner of Lot Nos. 640 and 641 R.P. in Demarcation District No. 51 is Modern.com Technology Limited, an indirect 20% owned associated company of the Company. The registered owner of the remaining agricultural lots is Starry Land Development Limited, an indirect 20% owned associated company of the Company.
(3) The property falls within the Fanling/Sheung Shui Outline Zoning Plan No. S/FSS/10 dated 22nd October, 2002 and is zoned as “Green Belt” areas. According to the explanatory notes attached to the said plan, any development relating to flat, house and residential institution will require an application under section 16 of the Town Planning Ordinance for approval.

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(4) The use and development of the building lot Fanling Sheung Shui Town Lot No. 182 is governed by New Grant No. 13181. The salient points of the said New Grant are as follows:–

(a)	Site area	:	32,723 sq.m. (352,230 sq.ft.).	32,723 sq.m. (352,230 sq.ft.).
(b)	use	:	Private residential purposes.
(c)	Building Covenant	:	On or	before 31st December, 2001.
(d)	Development conditions	:	(i)	Maximum gross floor area: 13,179 sq.m. (141,859 sq.ft.).
				Minimum gross floor area: 7,907 sq.m. (85,111 sq.ft.).
			(ii)	Maximum site coverage: 16.383%.
			(iii)	Maximum building height: 9 metres above mean formation
				level and 3 storeys.
			(iv)	Maximum number of private residential units: 112.
			(v)	Design and disposition (including external elevations and
				finishes) clause.

(e) Recreational facilities as may be approved by the Director may be provided. The total gross floor area of the club house shall not exceed 750 sq.m. (8,073 sq.ft.). The approved recreational facilities shall not be accountable for gross floor area and site coverage calculations.
(f) Not less than 1.5 parking spaces or carport for every private residential unit shall be provided. Any excessive space/carport is accountable for gross floor area calculation.
(5) According to a letter dated 24th April, 2001 issued by Lands Department, the building covenant of New Grant No. 13181 in respect of Fanling Sheung Shui Town Lot No. 182 has been suspended until further notice.

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PROPERTY VALUATION ON THE BESTEAM GROUP

APPENDIX VI

VALUATION CERTIFICATE

				Capital value in
			Particulars of	existing state as at
	Property	Description and tenure	occupancy	31st January, 2003
10.	The Remaining Portions	The property comprises 2	The property is	HK$8,000,000
	of Sections A and B of	agricultural lots in Tan Kwai	currently vacant.
	Lot No. 2744 in	Tsuen within Yuen Long District.
	Demarcation District No. 124,
	Tan Kwai Tsuen,	The property has a total
	Yuen Long,	registered site area of
	New Territories	approximately 6,050.54 sq.m.
		(65,128 sq.ft.).
		The property is held from the
		Government for a term of 75
		years renewable for a further
		term of 24 years less the last 3
		days commencing from 1st July,
		1898 which has been statutorily
		extended until 30th June, 2047.
		The current Government rent
		payable for the property is an
		amount equal to 3% of the
		rateable value for the time being
		of the property per annum.

Notes:

(1) The registered owner of the property is Cityscope Limited, an indirect wholly-owned subsidiary of the Company.
(2) The property falls within the Tong Yan San Tsuen Outline Zoning Plan No. S/YL-TYST/6 dated 19th October, 2001 and is zoned for “Comprehensive Development Area” (“CDA”). According to the explanatory notes attached to the said plan, any development on the CDA zone will require an application under section 16 of the Town Planning Ordinance for approval. Further, any development within the subject CDA zone shall not result in excess of a maximum gross floor area of 9,925 sq.m. (106,833 sq.ft.) subject to a maximum building height of 4-storeys over single-storey carport.
(3) As informed, a lease modification has been proposed. According to a letter dated 28th June, 1995 from Lands Department, the proposed new site area of the property after lease modification will be 9,880 sq.m. (106,348 sq.ft.).

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PROPERTY VALUATION ON THE BESTEAM GROUP

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VALUATION CERTIFICATE

Capital value in Particulars of existing state as at Property Description and tenure occupancy 31st January, 2003 11. Rural Building Lot The property comprises a The property is HK$390,000,000 No. 1161, building lot with a registered site currently under 33 and 35 Island Road, area of approximately 5,250 construction and is (57% interest Deep Water Bay, sq.m. (56,511 sq.ft.) upon which scheduled for attributable to the Hong Kong a residential development completion in end Group: comprising 10 garden houses of 2003. HK$222,300,000) 3 to 4-storeys is proposed to be erected.

Upon completion, the property will comprise a total domestic gross floor area of approximately 3,934.17 sq.m. (42,347 sq.ft.).

The property is held from the Government for a term of 50 years commencing on 26th August, 2002. The current Government rent payable for the property is an amount equal to 3% of the rateable value for the time being of the property per annum.

Notes:

(1) The registered owners of the property are Koon Soon Limited (43/100th shares), an independent third party and Hin Kei Investment Limited (57/100th shares), an indirect wholly-owned subsidiary of the Company.
(2) The property is subject to a mortgage in favour of The Hongkong and Shanghai Banking Corporation Limited.
(3) The property falls within Hong Kong Planning Area No. 17 (Part) and is zoned under Shouson Hill Road and Repulse Bay Outline Zoning Plan No. S/H17/7 dated 17th December, 2002 for “Residential (C) 3” purposes. According to the explanatory notes attached to the said plan, any development for “Residential (C) 3” purposes shall not exceed 3 storeys in addition to 1 storey of carports. Moreover, the maximum plot ratio and site coverage are 0.60 and 30% respectively for a maximum of 2 storey development and those for 3-storey development are 0.75 and 25% respectively.
(4) The use and development of the property is governed by Conditions of Exchange No. 12630. The salient points of the said Conditions of Exchange are as follows:–
(a) Site Area : 5,250 sq.m. (56,511 sq.ft.).
(b) Use : Private residential purposes.
(c) Maximum gross floor area : 3,937 sq.m. (42,378 sq.ft.).
(d) Maximum site coverage : 29%.
(e) Maximum number of storeys : 3 storeys in addition to one storey of carport.
(f) Standard clause for design, disposition & height.
(g) Car parking space to be provided at a rate of not less than 1.5 spaces per residential unit or not less than 2 spaces or car ports per house for single residence.
(5) We have been supplied with a set of building plans of the proposed development approved by the Building Authority on 29th November, 2002, subject to the compliance with the Buildings Ordinance and subsidiary legislation.
(6) As at the date of valuation, the total construction cost (including professional fees) and the expended cost were approximately HK$155,400,000 and HK$22,000,000 respectively. We have included such amounts in our valuation.
(7) The capital value when completed as at 31st January, 2003 was in the sum of HK$635,000,000.

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VALUATION CERTIFICATE

				Capital value in
			Particulars of	existing state as at
	Property	Description and tenure	occupancy	31st January, 2003
12.	21 Luk Hop Street,	The property comprises a site	The property is	HK$14,000,000
	San Po Kong,	with a registered area of	currently a cleared site
	Kowloon	approximately 780.38 sq.m.	used for open parking	(50% interest
		(8,400 sq.ft.).	purposes.	attributable to the
	New Kowloon Inland Lot			Group:
	No. 4873	The property is held from the		HK$7,000,000)
		Government for a term of 99
		years less the last 3 days
		commencing from 1st July,
		1898 which has been
		statutorily extended until
		30th June, 2047. The current
		Government rent payable for
		the property is an amount
		equal to 3% of the rateable
		value for the time being of
		the property per annum.

Notes:

(1) The registered owner of the property is Broad Reach Company Limited, an indirect 50% owned associated company of the Company.
(2) The property falls within Kowloon Planning Area No. 11 and is zoned under Tsz Wan Shan, Diamond Hill and San Po Kong Outline Zoning Plan No. S/K11/15 dated 31st May, 2002 for “Other Specified Uses” as “Business” zones. According to the explanatory notes attached to the said plan, any development in the “Business” zones shall not exceed a maximum plot ratio of 12.
(3) According to the Government lease, the property is restricted for industrial and/or godown purposes and is subject to a height restriction of 300 ft. above Hong Kong Principal Datum.
(4) The property is currently subject to a waiver issued by the District Lands Office, Kowloon East on 21st February, 2003 for temporary fee-paying public car park uses for a term of one year commencing on 2nd May, 2001 and thereafter quarterly.

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VALUATION CERTIFICATE

Capital value in Particulars of existing state as at Property Description and tenure occupancy 31st January, 2003 13. Various agricultural The property comprises various The property is HK$179,000,000 and building lots in agricultural and building lots in currently occupied for Demarcation Tai Po Tsai within Sai Kung barbecue areas and (14% interest District Nos. 227 and 229, District. open car parking attributable to the Tai Po Tsai, purposes under Group: Sai Kung, The property has a total licences. HK$25,060,000) New Territories registered site area of approximately 55,010 sq.m. (592,128 sq.ft.). The property is held from the Government for a term of 75 years commencing 1st July, 1898 renewable for a further term of 24 years which has been statutorily extended until 30th June, 2047. The current Government rent payable for the property is an amount equal to 3% of the rateable value for the time being of the property per annum.

Notes:

(1) The property comprises Lot Nos. 176 R.P., 196 s.A R.P., 197, 198 R.P., 199-201, 202 R.P., 203 R.P., 204, 207-209, 213 s.A & R.P., 214 s.A & R.P., 215, 216, 238 R.P., 269 s.A & R.P., 270-278, 279 s.A & R.P., 280309, 327 s.A & R.P., 328, 329 R.P., 410 R.P., 413 R.P., 416-420, 421 s.A & R.P., 422, 424, 425, 426 s.A, s.B & R.P., 427, 428, 429 s.A R.P., s.B & R.P., 430-432, 433 R.P., 434 R.P., 435, 437 R.P., 438 s.A R.P. & s.B R.P., 441 R.P., 446 R.P., 447-460, 469 R.P., 470 s.A, 480 R.P., 481 R.P., 482, 483 R.P., 484 s.A, s.B & R.P., 485, 486 R.P., 487-491, 492 s.A, s.B ss.1, s.B R.P.& R.P., 493-512, 513 s.A & R.P., 514 s.A & R.P., 515537, 538 s.A & R.P., 539-541, 543-546, 547 s.A, s.B & R.P., 548-550, 552, 553 s.A & R.P. and 562 in Demarcation District No. 227 and Lot Nos. 145, 146, 149, 153, 154 s.A & R.P., 155-158, 161-163, 164 s.A & R.P., 165-170, 172, 173 and 175-183 in Demarcation District No. 229.
(2) The registered owner of the property is Addlight Investments Limited, an indirect 14% owned associated company of the Company.
(3) The property is zoned under Clear Water Bay Peninsula North Development Permission Area Plan No. DPA/ SK-CWBN/1 dated 22nd March, 2002 partly for “Village” purposes, partly as “Conservation Area”, partly as “Green Belt” area and mostly as “Comprehensive Development Area (1)”.

According to the explanatory notes attached to the said plan, any development in the “Village” zone shall not result in excess of a maximum building height of 3 storeys (8.23 m.) or the height of the existing building(s), whichever is the greater.

As for “Comprehensive Development Area (1)”, any development on the “Comprehensive Development Area (1)” (“CDA (1)”) zone will require an application under section 16 of the Town Planning Ordinance for approval. Further, any development within the subject CDA (1) zone shall not result in excess of maximum domestic and non-domestic plot ratios of 1.47 and 0.03 respectively. The maximum site coverage shall not exceed 40%. The maximum number of storeys and building heights (excluding basement(s)) shall range from 6 to 8 storeys and 18 m. to 24 m. according to different sub-divided areas. According to a letter dated 12th July, 2002 issued by the Town Planning Board, an approval in respect of a proposed comprehensive residential development in the subject site (together with some adjoining Government land) was granted.

(4) The property is currently held by the Group as part of its land bank. As the property’s lease modification procedure has not yet been initiated and its development scheme has not been formulated, the valuation of the property reflects only the site value.

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APPENDIX VI

VALUATION CERTIFICATE

Group IV – Property held by the Group for investment purpose in the PRC

				Capital value in
			Particulars of	existing state as at
	Property	Description and tenure	occupancy	31st January, 2003
14.	House No. 2B,	The property comprises a	The property is	HK$4,750,000
	Phase 1,	3-storey detached villa house	currently vacant.
	Beijing Riviera,	with private garden and carport.
	1 Xiang Jiang North Road,	The villa house was completed
	Chaoyang District,	in 1996.
	Beijing
		The property has a lot area of
		approximately 390.20 sq.m.
		(4,200 sq.ft.) and a gross floor
		area of approximately
		313.50 sq.m. (3,375 sq.ft.).
		The land use rights of the
		property have been granted for a
		term from 14th June, 2000 to
		29th December, 2063 for
		residential uses.

Notes:

(1) According to Building Ownership Certificate No. 0150069 issued by Beijing Land Resources and Building Administration Bureau on 7th February, 2001, the building ownership right of the property comprising a total gross floor area of 313.50 sq.m. and a land use area of 390.20 sq.m. is held by Lipro Prosper Limited, an indirect wholly-owned subsidiary of the Company, for a term from 14th June, 2000 to 29th December, 2063.
The property is subject to a mortgage in favour of Dao Heng Bank Shenzhen Branch for a period from 15th October, 1996 to 14th October, 2008.
(2) According to Sale and Purchase Contract No. 94-10-071, Lipro Prosper Limited has agreed to purchase the property, comprising a gross floor area of 327.72 sq.m. and with a land use term from 30th December, 1993 to 29th December, 2063, at a consideration of US$709,861.
(3) The opinion of the PRC legal adviser, Commerce & Finance Law Offices, of the Group states that:–
(i) Lipro Prosper Limited has obtained Building Ownership Certificate No. 0150069 of the property.
(ii) The building ownership and the land use rights of the property, with a gross floor area of 313.50 sq.m. and a land area of 390.20 sq.m. has been granted to Lipro Prosper Limited for a term from 14th June, 2000 to 29th December, 2063 for residential use.
(iii) The property is subject to a mortgage in favour of Dao Heng Bank Shenzhen Branch for a consideration of US$425,916.60 for 12 years from 15th October, 1996 to 14th October, 2008.
(iv) Without the approval of the bank, Lipro Prosper Limited cannot lease, transfer, mortgage the land use rights together with the building ownership of the property.
(4) Based on the PRC legal opinion and the information provided by the Group, we have prepared our valuation on the following assumptions:–
(i) Lipro Prosper Limited is in possession of a proper legal title to the property and is entitled to transfer the property interest in its existing state and condition for residual term of its land use rights at no extra land premium or other onerous payment payable to the government;
(ii) all land premium and costs of urban utilities have been settled in full;
(iii) the design and construction of the property as set out in this valuation certificate is in compliance with the local planning regulations; and
(iv) the property interest can be disposed of freely to third parties.
(5) In accordance with the opinion of the PRC legal opinion and the information provided by the Group, the status of title and grant of major approvals and licenses are as follows:–

status of title and grant of major approvals and licenses are as follows:–
Certificate for the Use of State-owned Land	Yes
Red-line Drawing (site plan)	Yes
Building Ownership Certificate	Yes
Sale and Purchase Contract	Yes

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APPENDIX VII SUMMARY OF THE ARTICLES OF ASSOCIATION OF BESTEAM

Set out below is a summary of certain provisions of the Articles of Association (the “Articles”) of Besteam.

(a) Directors of Besteam (“Director(s)”)

(i) Power to allot and issue shares and warrants

Subject to the provisions of the International Business Act 1984 of the British Virgin Islands (the “IBC Act”) and the Articles and to any special rights conferred on the holders of any shares or class of shares, any share may be issued with or have attached thereto such rights, or such restrictions, whether with regard to dividend, voting, return of capital, or otherwise, as Besteam may by ordinary resolution determine (or, in the absence of any such determination or so far as the same may not make specific provision, as the board may determine). Subject to the IBC Act, the memorandum of association of Besteam and the Articles, any share may be issued on terms that, at the option of Besteam or the holder thereof, they are liable to be redeemed.

The board may issue warrants conferring the right upon the holders thereof to subscribe for any class of shares or securities in the capital of Besteam on such terms as it may from time to time determine.

Subject to the provisions of the IBC Act and the Articles and any direction that may be given by Besteam in general meeting and without prejudice to any special rights or restrictions for the time being attached to any shares or any class of shares, all unissued shares in Besteam shall be at the disposal of the board, which may offer, allot, grant options over or otherwise dispose of them to such persons, at such times, for such consideration and on such terms and conditions as it in its absolute discretion thinks fit, but so that no shares shall be issued at a discount.

Neither Besteam nor the board shall be obliged, when making or granting any allotment of, offer of, option over or disposal of shares, to make, or make available, any such allotment, offer, option or shares to members or others with registered addresses in any particular territory or territories being a territory or territories where, in the absence of a registration statement or other special formalities, this would or might, in the opinion of the board, be unlawful or impracticable. Members affected as a result of the foregoing sentence shall not be, or be deemed to be, a separate class of members for any purpose whatsoever.

(ii) Power to dispose of the assets of Besteam or any subsidiary

There are no specific provisions in the Articles relating to the disposal of the assets of Besteam or any of its subsidiaries. The Directors may, however, exercise all powers and do all acts and things which may be exercised or done or approved by Besteam and which are not required by the Articles or the IBC Act to be exercised or done by Besteam in general meeting.

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(iii) Compensation or payments for loss of office

Pursuant to the Articles, payments to any Director or past Director of any sum by way of compensation for loss of office or as consideration for or in connection with his retirement from office (not being a payment to which the Director is contractually entitled) must be approved by Besteam in general meeting.

(iv) Loans and provision of security for loans to Directors

There are provisions in the Articles prohibiting the making of loans to Directors.

(v) Disclosure of interests in contracts with Besteam or any of its subsidiaries.

A Director may hold any other office or place of profit with Besteam (except that of the auditors of Besteam) in conjunction with his office of Director for such period and, subject to the Articles, upon such terms as the board may determine, and may be paid such extra remuneration therefor (whether by way of salary, commission, participation in profits or otherwise) in addition to any remuneration provided for by or pursuant to any other Articles. A Director may be or become a director or other officer of, or otherwise interested in, any company promoted by Besteam or any other company in which Besteam may be interested, and shall not be liable to account to Besteam or the members for any remuneration, profits or other benefits received by him as a director, officer or member of, or from his interest in, such other company. Subject as otherwise provided by the Articles, the board may also cause the voting power conferred by the shares in any other company held or owned by Besteam to be exercised in such manner in all respects as it thinks fit, including the exercise thereof in favour of any resolution appointing the Directors or any of them to be directors or officers of such other company, or voting or providing for the payment of remuneration to the directors or officers of such other company.

Subject to the IBC Act and the Articles, no Director or proposed or intended Director shall be disqualified by his office from contracting with Besteam, either with regard to his tenure of any office or place of profit or as vendor, purchaser or in any other manner whatsoever, nor shall any such contract or any other contract or arrangement in which any Director is in any way interested be liable to be avoided, nor shall any Director so contracting or being so interested be liable to account to Besteam or the members for any remuneration, profit or other benefits realised by any such contract or arrangement by reason of such Director holding that office or the fiduciary relationship thereby established. A Director who to his knowledge is in any way, whether directly or indirectly, interested in a contract or arrangement or proposed contract or arrangement with Besteam shall declare the nature of his interest at the meeting of the board at which the question of entering into the contract or arrangement is first taken into consideration, if he knows his interest then exists, or in any other case, at the first meeting of the board after he knows that he is or has become so interested.

A Director shall not vote (nor be counted in the quorum) on any resolution of the board in respect of any contract or arrangement or other proposal in which he is to his knowledge materially interested but this prohibition shall not apply to any of the following matters, namely:

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(aa) any contract or arrangement for giving of any security or indemnity to the Director in respect of money lent or obligations incurred or undertaken by him at the request of or for the benefit of Besteam or any of its subsidiaries;
(bb) any contract or arrangement for the giving by Besteam of any security or indemnity to a third party in respect of a debt or obligation of Besteam or any of its subsidiaries for which the Director has himself assumed responsibility in whole or in part whether alone or jointly under a guarantee or indemnity or by the giving of security;
(cc) any contract or arrangement concerning an offer of shares or debentures or other securities of or by Besteam or any other company which Besteam may promote or be interested in for subscription or purchase, where the Director is or is to be interested as a participant in the underwriting or sub-underwriting of the offer;
(dd) any contract or arrangement in which the Director is interested in the same manner as other holders of shares or debentures or other securities of Besteam or any of its subsidiaries by virtue only of his interest in shares or debentures or other securities of Besteam;
(ee) any contract or arrangement concerning any other company in which he is interested only, whether directly or indirectly, as an officer or executive or a shareholder other than a company in which the Director together with any of his associates is beneficially interested in 5 percent. or more of the issued shares or of the voting rights of any class of shares of such company (or of any third company through which his interest is derived); or
(ff) any proposal concerning the adoption, modification or operation of a share option scheme, a pension fund or retirement, death, or disability benefits scheme or other arrangement which relates both to Directors and employees of Besteam or of any of its subsidiaries and does not provide in respect of any Director as such any privilege or advantage not accorded to the employees to which such scheme or fund relates.

(vi) Remuneration

The ordinary remuneration of the Directors shall from time to time be determined by the Directors, provided that the same shall be consistent with the level of remuneration paid to the directors of Asean Resources Holdings Limited as described in its annual reports published prior to the date of adoption of the Articles, and shall be divided amongst the Directors in such proportions and in such manner as the board may agree or, failing agreement, equally, except that any Director holding office for part only of the period in respect of which the remuneration is payable shall only rank in such division in proportion to the time during such period for which he held office. Any material variation of such remuneration shall be subject to the approval of the Minority Shareholders (as defined in the Articles) in general meeting.

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The Directors shall also be entitled to be prepaid or repaid all travelling, hotel and incidental expenses reasonably expected to be incurred or incurred by them in attending any board meetings, committee meetings or general meetings or separate meetings of any class of shares or of debentures of Besteam or otherwise in connection with the discharge of their duties as Directors.

Any Director who, by request, goes or resides abroad for any purpose of Besteam or who performs services which in the opinion of the board go beyond the ordinary duties of a Director may be paid such extra remuneration (whether by way of salary, commission, participation in profits or otherwise) as the board may determine and such extra remuneration shall be in addition to or in substitution for any ordinary remuneration as a Director. An executive Director appointed to be a managing director, joint managing director, deputy managing director or other executive officer shall receive such remuneration (whether by way of salary, commission or participation in profits or otherwise or by all or any of those modes) and such other benefits (including pension and/or gratuity and/or other benefits on retirement) and allowances as the board may from time to time decide. Such remuneration may be either in addition to or in lieu of his remuneration as a Director.

The board may establish or concur or join with other companies (being subsidiary companies of Besteam or companies with which it is associated in business) in establishing and making contributions out of Besteam’s monies to any schemes or funds for providing pensions, sickness or compassionate allowances, life assurance or other benefits for employees (which expression as used in this and the following paragraph shall include any Director or ex-Director who may hold or have held any executive office or any office of profit with Besteam or any of its subsidiaries) and ex-employees of Besteam and their dependents or any class or classes of such persons.

The board may pay, enter into agreements to pay or make grants of revocable or irrevocable, and either subject or not subject to any terms or conditions, pensions or other benefits to employees and ex-employees and their dependents, or to any of such persons, including pensions or benefits additional to those, if any, to which such employees or ex-employees or their dependents are or may become entitled under any such scheme or fund as is mentioned in the previous paragraph. Any such pension or benefit may, as the board considers desirable, be granted to an employee either before and in anticipation of, or upon or at any time after, his actual retirement.

(vii) Retirement, appointment and removal

At each annual general meeting, one third of the Directors for the time being (or if their number is not a multiple of three, then the number nearest to but not greater than one third) will retire from office by rotation provided that no Director holding office as chairman and/or managing director shall be subject to retirement by rotation, or be taken into account in determining the number of Directors to retire. The Directors to retire in every year will be those who have been longest in office since their last re-election or appointment but as between persons who became or were last re-elected Directors on the same day those to retire will (unless they otherwise agree among themselves) be determined by lot. There are no provisions relating to retirement of Directors upon reaching any age limit.

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APPENDIX VII SUMMARY OF THE ARTICLES OF ASSOCIATION OF BESTEAM

The Directors shall have the power from time to time and at any time to appoint any person as a Director either to fill a casual vacancy on the board or as an addition to the existing board. Any Director so appointed shall hold office only until the next following annual general meeting of Besteam and shall then be eligible for re-election. Neither a Director nor an alternate Director is required to hold any shares in Besteam by way of qualification.

A Director may be removed by a special resolution of Besteam before the expiration of his period of office (but without prejudice to any claim which such Director may have for damages for any breach of any contract between him and Besteam) and may by ordinary resolution appoint another in his place. Unless otherwise determined by Besteam in general meeting, the number of Directors shall not be less than two. There is no maximum number of Directors.

The office or director shall be vacated:

(aa) if he resigns his office by notice in writing delivered to Besteam at the registered office of Besteam for the time being or tendered at a meeting of the board whereupon the board resolves to accept such resignation;
(bb) becomes of unsound mind or dies;
(cc) if, without special leave, he is absent from meetings of the board (unless an alternate director appointed by him attends) for six (6) consecutive months, and the board resolves that his office is vacated;
(dd) if he becomes bankrupt or has a receiving order made against him or suspends payment or compounds with his creditors;
(ee) if he is prohibited from being a director by law; and
(ff) if he ceases to be a director by virtue of any provision of law or is removed from office pursuant to the Articles.

The board may from time to time appoint one or more of its body to be managing director, joint managing director, or deputy managing director or to hold any other employment or executive office with Besteam for such period and upon such terms as the board may determine and the board may revoke or terminate any of such appointments. The board may delegate any of its powers, authorities and discretions to committees consisting of such Director or Directors and other persons as the board thinks fit, and it may from time to time revoke such delegation or revoke the appointment of and discharge any such committees either wholly or in part, and either as to persons or purposes, but every committee so formed shall, in the exercise of the powers, authorities and discretions so delegated, conform to any regulations that may from time to time be imposed upon it by the board.

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(viii) Borrowing powers

The board may exercise all the powers of Besteam to raise or borrow money, to mortgage or charge all or any part of the undertaking, property and assets (present and future) and uncalled capital of Besteam and, subject to the IBC Act, to issue debentures, bonds and other securities of Besteam, whether outright or as collateral security for any debt, liability or obligation of Besteam or of any third party.

(ix) Proceedings of the Board

The board may meet for the despatch of business, adjourn and otherwise regulate their meetings as they think fit. Questions arising at any meeting shall be determined by a majority of votes. In the case of an equality of votes, the chairman of the meeting shall have an additional or casting vote.

(x) Register of Directors and Officers

The IBC Act and the Articles provide that Besteam is required to maintain at its registered office a register of directors and officers which is not available for inspection by the public. A copy of such register must be filed with the Registrar of Companies in the British Virgin Islands and any change must be notified to the Registrar within thirty (30) days of any change in such directors or officers.

(b) Alterations to constitutional documents

The Articles may be rescinded, altered or amended by Besteam in general meeting by special resolution. The Articles state that a special resolution shall be required to alter the provisions of the memorandum of association of Besteam, to amend the Articles or to change the name of Besteam.

(c) Alteration of capital

Besteam may from time to time by ordinary resolution amend its memorandum of association to alter the conditions of its memorandum of association to:

(i) increase its capital by such sum, to be divided into shares of such amounts as the resolution shall prescribe;
(ii) consolidate and divide all or any of its capital into shares of larger amount than its existing shares;
(iii) divide its shares into several classes and without prejudice to any special rights previously conferred on the holders of existing shares attach thereto respectively any preferential, deferred, qualified or special rights, privileges, conditions or restrictions as Besteam in general meeting or as the directors may determine;
(iv) sub-divide its shares or any of them into shares of smaller amount than is fixed by the memorandum of association of Besteam, subject nevertheless to the provisions of the IBC Act, and so that the resolution whereby any share is subdivided may determine that, as between the holders of the shares resulting from such sub-division, one or more of the shares may have any such preferred

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or other special rights, over, or may have such deferred rights or be subject to any such restrictions as compared with the others as Besteam has power to attach to unissued or new shares; or

(v) cancel any shares which, at the date of passing of the resolution, have not been taken, or agreed to be taken, by any person, and diminish the amount of its capital by the amount of the shares so cancelled.

Besteam may subject to the provisions of the IBC Act reduce its share capital or other undistributable reserve in any way by special resolution.

(d) Variation of rights of existing shares or classes of shares

Subject to the IBC Act, all or any of the special rights attached to the shares or any class of shares may (unless otherwise provided for by the terms of issue of that class) be varied, modified or abrogated either with the consent in writing of the holders of not less than three-fourths in nominal value of the issued shares of that class or with the sanction of a special resolution passed at a separate general meeting of the holders of the shares of that class. To every such separate general meeting the provisions of the Articles relating to general meetings will mutatis mutandis apply, but so that the necessary quorum (other than at an adjourned meeting) shall be two persons holding or representing by proxy not less than one-third in nominal value of the issued shares of that class and at any adjourned meeting two holders present in person or by proxy whatever the number of shares held by them shall be a quorum. Every holder of shares of the class shall be entitled on a poll to one vote for every such share held by him, and any holder of shares of the class present in person or by proxy may demand a poll.

The special rights conferred upon the holders of any shares or class of shares shall not, unless otherwise expressly provided in the rights attaching to the terms of issue of such shares, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.

(e) Special resolution-majority required

Pursuant to the Articles, a special resolution of Besteam must be passed by a majority of not less than three-fourths of the votes cast by such members as, being entitled so to do, vote in person or, in the case of such members as are corporations, by their duly authorised representatives or, where proxies are allowed, by proxy at a general meeting of which not less than twenty-one (21) clear days’ notice, specifying the intention to propose the resolution as a special resolution, has been duly given. Provided that, except in the case of an annual general meeting, if it is so agreed by a majority in number of the members having a right to attend and vote at such meeting, being a majority together holding not less than ninety-five (95) per cent. in nominal value of the shares giving that right and, in the case of an annual general meeting, if so agreed by all members entitled to attend and vote thereat, a resolution may be proposed and passed as a special resolution at a meeting of which less than twentyone (21) clear days’ notice has been given.

An ordinary resolution is defined in the Articles to mean a resolution passed by a simple majority of the votes of such members of Besteam as, being entitled to do so, vote in person or, in the case of corporations, by their duly authorised representatives or, where proxies are allowed, by proxy at a general meeting held in accordance with the Articles.

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(f) Voting rights (generally and on a poll) and right to demand a poll

Subject to any special rights or restrictions as to voting for the time being attached to any shares by or in accordance with the Articles, at any general meeting on a show of hands, every member who is present in person or by proxy or being a corporation, is present by a representative duly authorised shall have one vote and on a poll every member present in person or by proxy or, in the case of a member being a corporation, by its duly authorised representative shall have one vote for every fully paid share of which he is the holder but so that no amount paid up or credited as paid up on a share in advance of calls or installments is treated for the foregoing purposes as paid up on the share. On a poll, a member entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way.

At any general meeting a resolution put to the vote of the meeting is to be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded by (i) the chairman of the meeting or (ii) at least three members present in person or, in the case of a member being a corporation, by its duly authorised representative or by proxy for the time being entitled to vote at the meeting or (iii) any member or members present in person or, in the case of a member being a corporation, by its duly authorised representative or by proxy and representing not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting or (iv) a member or members present in person or, in the case of a member being a corporation, by its duly authorised representative or by proxy and holding shares in Besteam conferring a right to vote at the meeting being shares on which an aggregate sum has been paid equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.

(g) Requirements for annual general meetings

An annual general meeting of Besteam must be held in each year, other than the year of incorporation (within a period of not more than 15 months after the holding of the last preceding annual general meeting or a period of 18 months from the date of incorporation unless otherwise resolved by the members at a general meeting at such time and place as may be determined by the board.

(h) Accounts and audit

The board shall cause true accounts to be kept of the sums of money received and expended by Besteam, and the matters in respect of which such receipt and expenditure take place, and of the property, assets, credits and liabilities of Besteam and of all other matters required by the IBC Act and in accordance with the generally accepted accounting principles and practices in Hong Kong or necessary to give a true and fair view of Besteam’s affairs and to explain its transactions.

The accounting records shall be kept at the registered office or at such other place or places as the board decides and shall always be open to inspection by any Director. No member (other than a Director) shall have any right to inspect any accounting record or book or document of Besteam except as conferred by law or authorised by the board or Besteam in general meeting.

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A copy of every balance sheet and profit and loss account (including every document required by law to be annexed thereto) which is to be laid before Besteam at its general meeting, together with a printed copy of the Directors’ report and a copy of the auditors’ report, shall be sent to every person entitled thereto within the time prescribed under the Listing Rules (as defined in the Articles); however, subject to compliance with all applicable laws, Besteam may send to such persons a summary financial statement derived from Besteam’s annual accounts and the directors’ report instead provided that any such person may by notice in writing served on Besteam, demand that Besteam sends to him, in addition to a summary financial statement, a complete printed copy of Besteam’s annual financial statement and the directors’ report thereon.

Auditors shall be appointed and the terms and tenure of such appointment and their duties at all times regulated in accordance with the provisions of the Articles. The remuneration of the auditors shall be fixed by Besteam in general meeting or in such manner as the members may determine.

The financial statements of Besteam shall be audited by the auditor in accordance with generally accepted auditing standards. The auditor shall make a written report thereon in accordance with generally accepted auditing standards applicable in Hong Kong and the report of the auditors shall be sent to the members within the time prescribed under the Listing Rules (as defined in the Articles).

(i) Notices of meetings and business to be conducted thereat

An annual general meeting and any extraordinary general meeting at which it is proposed to pass a special resolution shall (save as set out in sub-paragraph (e) above) be called by at least twenty-one (21) clear days’ notice in writing, and any other extraordinary general meeting shall be called by at least fourteen (14) clear days’ notice (in each case exclusive of the day on which the notice is served or deemed to be served and of the day for which it is given). The notice must specify the time and place of the meeting and, in the case of special business, the general nature of that business. In addition notice of every general meeting shall be given to all members of Besteam other than such as, under the provisions of the Articles or the terms of issue of the shares they hold, are not entitled to receive such notices from Besteam, and also to the auditors for the time being of Besteam.

Notwithstanding that a meeting of Besteam is called by shorter notice than that mentioned above, it shall be deemed to have been duly called if it is so agreed:

(i) in the case of a meeting called as an annual general meeting, by all members of Besteam entitled to attend and vote thereat; and
(ii) in the case of any other meeting, by a majority in number of the members having a right to attend and vote at the meeting, being a majority together holding not less than ninety-five (95) per cent in nominal value of the issued shares giving that right.

All business shall be deemed special that is transacted at an extraordinary general meeting and also all business shall be deemed special that is transacted at an annual general meeting with the exception of the following, which shall be deemed ordinary business:

(aa) the declaration and sanctioning of dividends;

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(bb) the consideration and adoption of the accounts and balance sheet and the reports of the directors and the auditors;
(cc) the election of directors in place of those retiring;
(dd) the appointment of auditors and other officers; and
(ee) the fixing of the remuneration of the directors and of the auditors.

(j) Transfer of shares

All transfers of shares may be effected by an instrument of transfer in the usual or common form or in such other form as the board may approve and which may be under hand or by machine imprinted signature or by such other manner of execution as the board may approve from time to time. The instrument of transfer shall be executed by or on behalf of the transferor and the transferee provided that the board may dispense with the execution of the instrument of transfer by the transferee in any case in which it thinks fit, in its discretion, to do so and the transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in the register of members in respect thereof. The board may also resolve either generally or in any particular case, upon request by either the transferor or the transferee, to accept mechanically executed transfers.

The board in so far as permitted by any applicable law may, in its absolute discretion, at any time and from time to time transfer any share upon the principal register to any branch register or any share on any branch register to the principal register or any other branch register.

Unless the board otherwise agrees, no shares on the principal register shall be transferred to any branch register nor may shares on any branch register be transferred to the principal register or any other branch register. All transfers and other documents of title shall be lodged for registration and registered, in the case of shares on a branch register, at the relevant registration office and, in the case of shares on the principal register, at the registered office in the British Virgin Islands or such other place at which the principal register is kept in accordance with the IBC Act.

The board may, in its absolute discretion, and without assigning any reason, refuse to register a transfer of any share issued under any share incentive scheme for employees upon which a restriction on transfer imposed thereby still subsists, and it may also refuse to register a transfer of any share to more than four joint holders or any transfer of any share issued for a promissory note or other binding obligation to contribute money or property or a contribution thereof to Besteam on which Besteam has a lien.

The board may decline to recognise any instrument of transfer unless the instrument of transfer is in respect of only one class of share, the instrument of transfer is lodged at the relevant registration office or registered office or such other place at which the principal register is kept accompanied by the relevant share certificate(s) and such other evidence as the board may reasonably require to show the right of the transferor to make the transfer (and if the instrument of transfer is executed by some other person on his behalf, the authority of that person so to do) or, if applicable, the instrument of transfer is duly and properly stamped.

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The registration of transfers may be suspended and the register closed on giving notice by advertisement in the appointed newspaper or by other means as set out in the Articles, at such times and for such periods as the board may determine and either generally or in respect of any class of shares. The register of members shall not be closed for periods exceeding in the whole thirty (30) days in any year.

(k) Power for Besteam to purchase its own shares

Subject to the IBC Act, the memorandum of association of Besteam and the Articles, Besteam shall have all the powers conferred upon it by the IBC Act to purchase or otherwise acquire its own shares and such power shall be exercisable by the board in such manner, upon such terms and subject to such conditions as it thinks fit, including but not limited to, the purchase of shares at a price lesser than fair value.

Shares that Besteam purchases, redeems or otherwise acquires pursuant to the Articles may be cancelled or held as treasury shares unless the shares are purchased, redeemed or otherwise acquired by virtue of a reduction in capital in a manner that would be a contravention of the requirements of section 35(3) of the IBC Act, in which case they shall be cancelled but they shall be available for reissue. Upon the cancellation of a Share, the amount included as capital of Besteam with respect to that Share shall be deducted from the capital of Besteam.

Where Shares are held by Besteam as treasury shares or are held by another company of which Besteam holds, directly or indirectly, Shares having more than fifty percent of the votes in the election of directors of the other company, such Shares are not entitled to vote or to have dividends paid thereon and shall not be treated as outstanding for any purpose except for purposes of determining the capital of Besteam.

(l) Power for any subsidiary of Besteam to own shares in Besteam

There are no provisions in the Articles relating to ownership of shares in Besteam by a subsidiary.

(m) Dividends and other methods of distribution

Subject to the IBC Act, for so long as Besteam has profits, the Directors shall declare and pay to all members on a pro rata basis in respect of each financial year a dividend after making such provisions for the general working capital requirement of Besteam as the board may, subject to review by the Auditors, determine.

Except in so far as the rights attaching to, or the terms of issue of, any Share otherwise provide, all dividends shall be apportioned and paid pro rata according to the amounts paid up on the shares during any portion or portions of the period in respect of which the dividend is paid.

Whenever the board has resolved that a dividend be paid or declared on the share capital of Besteam, the board may further resolve either (a) that such dividend be satisfied wholly or in part in the form of an allotment of shares credited as fully paid up, provided that the shareholders entitled thereto will be entitled to elect to receive such dividend (or part thereof) in cash in lieu of such allotment, or (b) that shareholders entitled to such

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dividend will be entitled to elect to receive an allotment of shares credited as fully paid up in lieu of the whole or such part of the dividend as the board may think fit. Besteam may also upon the recommendation of the board by an ordinary resolution resolve in respect of any one particular dividend of Besteam that it may be satisfied wholly in the form of an allotment of shares credited as fully paid up without offering any right to shareholders to elect to receive such dividend in cash in lieu of such allotment.

Any dividend, interest or other sum payable in cash to the holder of shares may be paid by cheque or warrant sent through the post addressed to the holder at his registered address, or in the case of joint holders, addressed to the holder whose name stands first in the register of Besteam in respect of the shares at his address as appearing in the register or addressed to such person and at such addresses as the holder or joint holders may in writing direct. Every such cheque or warrant shall, unless the holder or joint holders otherwise direct, be made payable to the order of the holder or, in the case of joint holders, to the order of the holder whose name stands first on the register in respect of such shares, and shall be sent at his or their risk and payment of the cheque or warrant by the bank on which it is drawn shall constitute a good discharge to Besteam. Any one of two or more joint holders may give effectual receipts for any dividends or other moneys payable or property distributable in respect of the shares held by such joint holders.

Whenever the board has resolved that a dividend be paid or declared the board may further resolve that such dividend be satisfied wholly or in part by the distribution of specific assets of any kind.

All dividends or bonuses unclaimed for one year after having been declared may be invested or otherwise made use of by the board for the benefit of Besteam until claimed and Besteam shall not be constituted a trustee in respect thereof. All dividends or bonuses unclaimed for six years after having been declared may be forfeited by the board and shall revert to Besteam.

No dividend or other monies payable by Besteam on or in respect of any share shall bear interest against Besteam.

(n) Proxies

Any member of Besteam entitled to attend and vote at a meeting of Besteam is entitled to appoint another person as his proxy to attend and vote instead of him. A member who is the holder of two or more shares may appoint more than one proxy to represent him and vote on his behalf at a general meeting of Besteam or at a class meeting. A proxy need not be a member of Besteam and shall be entitled to exercise the same powers on behalf of a member who is an individual and for whom he acts as proxy as such member could exercise. In addition, a proxy shall be entitled to exercise the same powers on behalf of a member which is a corporation and for which he acts as proxy as such member could exercise if it were an individual member. On a poll or on a show of hands, votes may be given either personally (or, in the case of a member being a corporation, by its duly authorised representative) or by proxy.

(o) Forfeiture of shares

When Shares issued for a promissory note or other written obligation for payment of a debt have been issued subject to forfeiture, the following provisions shall apply.

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APPENDIX VII SUMMARY OF THE ARTICLES OF ASSOCIATION OF BESTEAM

Written notice specifying a date for payment to be made and the shares in respect of which payment is to be made shall be served on the member who defaults in making payment pursuant to a promissory note or other written obligation to pay a debt.

The written notice specifying a date for payment shall:

(a) name a further date not earlier than the expiration of 14 days from the date of service of the notice on or before which payment required by the notice is to be made; and
(b) contain a statement that in the event of non-payment at or before the time named in the notice the Shares, or any of them, in respect of which payment is not made will be liable to be forfeited.

Where a written notice has been issued and the requirements have not been complied with within the prescribed time, the Directors may at any time before tender of payment forfeit and cancel the Shares to which the notice relates.

Besteam is under no obligation to refund any monies to the member whose Shares have been forfeited and cancelled. Upon forfeiture and cancellation of the Shares, the member is discharged from any further obligation to Besteam with respect to the Shares forfeited and cancelled.

When any Share has been forfeited, notice of the forfeiture shall be served upon the person who was before forfeiture the holder of the share. No forfeiture shall be invalidate by any omission or neglect to give such notice.

The board may accept the surrender of any Share liable to be forfeited and, in such case, references in the Articles to forfeiture will include surrender.

A declaration by a Director or the Secretary that a Share has been forfeited on a specified date shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the Share, and such declaration shall (subject to the execution of an instrument of transfer by Besteam if necessary) constitute a good title to the Share, and the person to whom the Share is disposed of shall be registered as the holder of the Share and shall not be bound to see to the application of the consideration (if any), nor shall his title to the Share be affected by any irregularity in or invalidity of the proceedings in reference to the forfeiture, sale or disposal of the Share. When any Share shall have been forfeited, notice of the declaration shall be given to the member in whose name it stood immediately prior to the forfeiture, and an entry of the forfeiture, with the date thereof, shall forthwith be made in the register, but no forfeiture shall be in any manner invalidated by any omission or neglect to give such notice or make any such entry.

Notwithstanding any such forfeiture as aforesaid, the board may at any time, before any Shares so forfeited shall have been sold, re-allotted or otherwise disposed of, permit the Shares forfeited to be bought back upon the terms of payment of all calls and interest due upon and expenses incurred in respect of the Share, and upon such further terms (if any) as it thinks fit.

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APPENDIX VII SUMMARY OF THE ARTICLES OF ASSOCIATION OF BESTEAM

(p) Inspection of share register

Pursuant to the Articles the register and branch share register shall be open to inspection for at least two (2) hours on every business day by members without charge, or by any other person upon a maximum payment of HK$2.50 or such lesser sum specified by the board, at the registered office or such other place at which the register is kept in accordance with the IBC Act or, upon a maximum payment of HK$1.00 or such lesser sum specified by the board, at the Registration Office (as defined in the Articles), unless the register is closed in accordance with the Articles.

(q) Quorum for meetings and separate class meetings

No business shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business, but the absence of a quorum shall not preclude the appointment of a chairman.

Save as otherwise provided by the Articles the quorum for a general meeting shall be two members present in person (or, in the case of a member being a corporation, by its duly authorised representative) or by proxy and entitled to vote. In respect of a separate class meeting (other than an adjourned meeting) convened to sanction the modification of class rights the necessary quorum shall be two persons holding or representing by proxy not less than one-third in nominal value of the issued shares of that class.

A corporation being a member shall be deemed for the purpose of the Articles to be present in person if represented by its duly authorised representative being the person appointed by resolution of the directors or other governing body of such corporation to act as its representative at the relevant general meeting of Besteam or at any relevant general meeting of any class of members of Besteam.

(r) Reserved matters

Notwithstanding any provision contained in the Articles, the following transactions shall require the approval of a simple majority of votes cast by the Minority Shareholders (as defined in the Articles) who will be independently advised by financial advisers as, being entitled so to do, vote in person or, in the case of any member being a corporation, by its duly authorised representative or, where proxies are allowed, by proxy at a general meeting of which not less than fourteen (14) clear days’ notice has been duly given:

(a) any acquisition of assets with an aggregate value of more than 10% of the gross value of the assets of Besteam and its subsidiaries as shown in the latest audited consolidated balance sheet of Besteam, in any financial year or until such accounts are available, the unaudited pro forma statement of assets and liabilities of Besteam and its subsidiaries as contained in the circular of Asean Resources dated 10th April, 2003;
(b) any connected transaction falling within the definition of the Listing Rules (as defined in the Articles) other than the connected transactions which do not require independent members’ approval under the Listing Rules (as defined in the Articles);

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APPENDIX VII SUMMARY OF THE ARTICLES OF ASSOCIATION OF BESTEAM

(c) any issue or allotment of shares or securities of Besteam save with respect to
(i) an offer of shares in the capital of Besteam or an offer or issue of warrants or options or similar instruments to subscribe for shares in the capital of Besteam open for a period fixed by the Directors to members whose names appear on Besteam’s register of members on a fixed record date in proportion to their then holdings of Shares (subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations in any territory outside Hong Kong applicable to Besteam and made in furtherance of the objectives of Besteam); or
(ii) an offer or issue of options to subscribe for 104,200,000 shares in the capital of Besteam to the holders of the share options in Asean Resources Holdings Limited as at the date of the adoption of the Articles;
(d) the entering into any guarantee, contract of indemnity or suretyship or to assure, support or secure the performance of any obligations of any connected persons (as defined in the Listing Rules (as defined in the Articles)) unless it is for the furtherance of the objectives of Besteam;
(e) the borrowing or raising or securing of the payment of money unless it is for the furtherance of the objectives of Besteam; and
(f) the making of any investment that is outside the scope of the objectives of Besteam.

(s) Procedures on liquidation

A resolution that Besteam be wound up by the court or be wound up voluntarily shall be a special resolution.

Subject to any special rights, privileges or restrictions as to the distribution of available surplus assets on liquidation for the time being attached to any class or classes of shares (i) if Besteam shall be wound up and the assets available for distribution amongst the members of Besteam shall be more than sufficient to repay the whole of the capital paid up at the commencement of the winding up, the excess shall be distributed pari passu amongst such members in proportion to the amount paid up on the shares held by them respectively and (ii) if Besteam shall be wound up and the assets available for distribution amongst the members as such shall be insufficient to repay the whole of the paid-up capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the members in proportion to the capital paid up, or which ought to have been paid up, at the commencement of the winding up on the shares held by them respectively.

If Besteam shall be wound up (whether the liquidation is voluntary or by the court) the liquidator may, with the authority of a special resolution and any other sanction required by the IBC Act divide among the members in specie or kind the whole or any part of the assets of Besteam whether the assets shall consist of property of one kind or shall consist of properties of different kinds and the liquidator may, for such purpose, set such value as he

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APPENDIX VII SUMMARY OF THE ARTICLES OF ASSOCIATION OF BESTEAM

deems fair upon any one or more class or classes of property to be divided as aforesaid and may determine how such division shall be carried out as between the members or different classes of members. The liquidator may, with the like authority, vest any part of the assets in trustees upon such trusts for the benefit of members as the liquidator, with the like authority, shall think fit, but so that no contributory shall be compelled to accept any shares or other property in respect of which there is a liability.

(t) Untraceable members

Pursuant to the Articles, Besteam may sell any of the shares of a member who is untraceable if (i) all cheques or warrants (being not less than three in total number) for any sum payable in cash to the holder of such shares have remained uncashed for a period of 12 years; (ii) upon the expiry of the 12 year period, Besteam has not during that time received any indication of the existence of the member; and (iii) Besteam has given notice to, and caused advertisement in the appointed newspaper to be made of its intention to sell such shares and a period of three (3) months, has elapsed since such advertisement. The net proceeds of any such sale shall belong to Besteam and upon receipt by Besteam of such net proceeds, it shall become indebted to the former member of Besteam for an amount equal to such net proceeds.

– 150 –

GENERAL INFORMATION

APPENDIX VIII

RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Asean Resources group. The directors of Asean Resources jointly and severally accept full responsibility for the accuracy of the information contained in this circular other than those relating to Mexan Group, Mexan Holdings and United Goal Development and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, opinions expressed in this circular other than those relating to Mexan Group, Mexan Holdings and United Goal Development have been arrived at after due and careful consideration and there are no other facts not contained in this circular, the omission of which would make any statement in this circular misleading.

The directors of United Goal Development jointly and severally accept full responsibility for the accuracy of the information contained in this circular other than those relating to Mexan Group, Mexan Holdings and the Asean Resources group and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, opinions expressed in this circular other than those relating to Mexan Group, Mexan Holdings and the Asean Resources group have been arrived at after due and careful consideration and there are no other facts not contained in this circular, the omission of which would make any statement in this circular misleading.

The directors of Mexan Group jointly and severally accept full responsibility for the accuracy of the information contained in this circular other than those relating to Mexan Holdings, the Asean Resources group, the Besteam group, and United Goal Development and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, opinions expressed in this circular other than those relating to Mexan Holdings, the Asean Resources group, the Besteam group, and United Goal Development have been arrived at after due and careful consideration and there are no other facts not contained in this circular, the omission of which would make any statement in this circular misleading.

The directors of Mexan Holdings jointly and severally accept full responsibility for the accuracy of the information contained in this circular other than those relating to Mexan Group, United Goal Development, the Besteam group, and the Asean Resources group and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, opinions expressed in this circular other than those relating to Mexan Group, United Goal Development, the Besteam group, and the Asean Resources group have been arrived at after due and careful consideration and there are no other facts not contained in this circular, the omission of which would make any statement in this circular misleading.

DISCLOSURE OF INTERESTS

(a) Directors’ interests and short positions in the securities of Asean Resources and its associated corporations

The interests and short positions of the directors in the securities of Asean Resources and its associated corporations, within the meaning of Part XV of the SFO, which were required to be notified to Asean Resources and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO, including interests and short positions which they were deemed or taken to have under such provisions of the SFO, or which are required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or which are required, pursuant to the Model Code for

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GENERAL INFORMATION

APPENDIX VIII

Securities Transactions by Directors of Listed Companies contained in the Listing Rules, to be notified to Asean Resources and the Stock Exchange as at the latest practicable date were as follows:

Long position in shares:

		Number of Asean	Shareholding
Name of director	Capacity	Resources shares	percentage (%)
Peter Chan	(Note ii)	955,970,289	74.30
(Note i)		(Note iii)
Wong Kam Cheong,	Beneficial owner	981,570	0.07
Stanley
Lai Yu Ting	Beneficial owner	130,000	0.01

Notes:

i. A substantial shareholder of Asean Resources.
ii. Mr. Peter Chan held 77,190,000 Asean Resources shares as beneficial owner and 878,780,289 Asean Resources shares through his controlled corporation, United Goal Development. Mr. Peter Chan personally held one share of US$1 in United Goal Development, representing 50% of its issued share capital and thus, is taken to have an interest in the Asean Resources shares which were held by United Goal Development by virtue of section 344 of the SFO.
iii. Pursuant to the sale and purchase agreement, this represents the sale shares held by United Goal Development and Mr. Peter Chan to be sold to Mexan Group at HK$0.8784 per sale share. The sale and purchase agreement is conditional and is subject to the fulfillment or waiver of the conditions as contained therein. The long stop date for completion of the sale and purchase of such sale shares is on 30th June, 2003.

Long position in underlying shares of equity derivatives:

			Number of
		Number and	underlying
		description of	Asean Resources
Name of director	Capacity	equity derivatives	shares
Peter Chan	Beneficial owner	30,646,000	30,646,000
		share options
		(Notes i and ii)
Lo Lin Shing, Simon	Beneficial owner	15,324,000	15,324,000
		share options
		(Notes i and ii)
Wong Kam Cheong,	Beneficial owner	15,324,000	15,324,000
Stanley		share options
		(Notes i and ii)
Lai Yu Ting	Beneficial owner	12,258,000	12,258,000
		share options
		(Notes i and ii)
Lai Hing Chiu,	Beneficial owner	6,130,000	6,130,000
Dominic		share options
		(Notes i and ii)

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GENERAL INFORMATION

APPENDIX VIII

Notes:

i. The share options were granted under the share option scheme and entitled the optionholders to subscribe for Asean Resources shares at a subscription price of HK$0.68 per Asean Resources share, subject to adjustment, during the period from 21st March, 2000 to 20th March, 2003. These share options are subject of the share option agreement in relation to, inter alia, the cancellation of all the share options and the extension of the option period by six calendar months from 21st March, 2003 upon the terms and conditions as contained in the share option agreement.
ii. All of the above share options are physically settled equity derivatives.

(b) Persons who have an interest or short position which is discloseable under Divisions 2 and 3 of Part XV of the SFO

Save as disclosed below, as at the latest practicable date, so far as is known to the directors, no other person (other than a director whose interests are disclosed above) had, or was deemed or taken to have an interest or short position in the securities of Asean Resources which would fall to be disclosed to Asean Resources and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO:

Long position in shares:

		Number of Asean	Number of Asean	Shareholding
Name	Capacity	Resources shares		percentage (%)
		Direct interest	Deemed interest
United Goal	Beneficial	878,780,289	–	68.30
Development	owner
Chow Tai Fook	(Note i)	–	878,780,289	68.30
Enterprises
Limited
Chow Tai Fook	(Note ii)	–	878,780,289	68.30
Jewellery
Company
Limited

Notes:

i. Both Chow Tai Fook Enterprises Limited (“CTFE”) and Mr. Peter Chan were deemed to be interested in the 878,780,289 Asean Resources shares held by United Goal Development by virtue of section 316 of the SFO as United Goal Development is 50% owned by each of CTFE and Mr. Peter Chan.
ii. Chow Tai Fook Jewellery Company Limited was deemed to be interested in the same parcel of Asean Resources shares owned by United Goal Development by virtue of the SFO.

Pursuant to the sale and purchase agreement, a total of 955,970,289 Asean Resources shares held by United Goal Development and Mr. Peter Chan will be acquired by Mexan Group at HK$0.8784 per Asean Resources share conditional upon the fulfillment or waiver of the conditions precedent to the completion of the sale and purchase agreement.

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GENERAL INFORMATION

APPENDIX VIII

(c) Substantial shareholders of other members of the Asean Resources group

Save as disclosed below, as at the latest practicable date, so far as is known to the directors, no other person was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of the subsidiaries of Asean Resources or has any option in respect of such capital:

		Proportion of
		nominal value of
	Name of	issued share capital/
Name of subsidiary	beneficial owner	registered capital held
Regal Trophy Limited	Guoco Group Limited	25%
as well as its wholly-owned
subsidiaries, United Prosper	Hong Leong Holdings	20%
Limited and World Glory	Limited
Properties Limited

SERVICE CONTRACTS

No director has an unexpired service contract which is not terminable by Asean Resources or any of its subsidiaries within one year without payment of compensation, other than normal statutory obligations.

EXPERTS AND CONSENTS

The following are the qualifications of the experts who have provided their advice, reports and valuations, as the case may be, which are contained in this circular:

Name	Qualifications
Anglo Chinese	a licensed corporation under the SFO
Somerley	a licensed corporation under the SFO
PricewaterhouseCoopers	certified public accountants
DTZ	professional property valuers

Anglo Chinese, Somerley, PricewaterhouseCoopers and DTZ have given and have not withdrawn their written consent to the issue of this circular with the inclusion of their respective letters and the references to their respective names in the form and context in which they respectively appear.

As at the latest practicable date, Anglo Chinese, Somerley, PricewaterhouseCoopers and DTZ were not interested beneficially or otherwise in any Asean Resources shares or shares in any of its subsidiaries or associated companies and did not have any right, whether legally enforceable or not, or option to subscribe for or to nominate persons to subscribe for any Asean Resources shares or shares in any of its subsidiaries or associated companies nor did it have any interest, either direct or indirect, in any assets which have been, since the date to which the latest published audited accounts of Asean Resources were made up, acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Asean Resources group.

– 154 –

GENERAL INFORMATION

APPENDIX VIII

LITIGATION

Save and except for the legal proceedings relating to the claims for arrears of rent, licence fee, management fee and other outgoings under or other matters relating to the tenancies and licences in respect of the Elizabeth House, so far as the directors are aware, as at the lastest practicable date, none of the members of the Asean Resources group is engaged in any litigation or arbitration of material importance and there was no litigation, arbitration proceeding or claim of material importance known to the directors to be pending or threatened against any members of the Asean Resources group.

MATERIAL CONTRACTS

As at the latest practicable date, the following contracts, not being contracts entered into in the ordinary course of business, were entered into by members of the Asean Resources group within the two years immediately preceding the date of this circular and are, or may be, material:

loan agreement in relation to loan facility of HK$105 million entered into between a company whose securities are listed on the Stock Exchange as borrower and Asean Resources Limited, a member of the Asean Resources group, as lender on 2nd November, 2001 (the “loan agreement”);
supplemental agreement to the loan agreement dated 6th November, 2002 (the “supplemental agreement”);
share mortgage under the supplemental agreement dated 6th November, 2002; and
the share option agreement.

MISCELLANEOUS

Save as disclosed in the section headed “Disclosure of interests” in this appendix and except the sale and purchase agreement and the share option agreement, there is no contract or arrangement subsisting as at the date thereof in which any director is materially interested and which is significant in relation to the business of the Asean Resources group.
None of the directors has, or has had, any direct or indirect interest in any assets which have been acquired, disposed of or leased to, or which are proposed to be acquired, disposed of or leased to, Asean Resources or any of its subsidiaries since 31st March, 2002, the date to which the latest published audited accounts of Asean Resources were made up.
The registered office of Asean Resources is at Clarendon House, Church Street, Hamilton HM 11, Bermuda. The principal place of business of Asean Resources in Hong Kong is at 39th Floor, New World Tower I, 18 Queen’s Road Central, Hong Kong. The Hong Kong branch share registrars of Asean Resources is Tengis Limited of Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong.
The company secretary of Asean Resources is Ms. Yuen Lai Sheung who is an associate member of The Hong Kong Institute of Company Secretaries and The Institute of Chartered Secretaries and Administrators.

– The English texts of this circular and the accompanying form of proxy shall prevail over their respective Chinese texts.

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GENERAL INFORMATION

APPENDIX VIII

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during business hours at the offices of Iu, Lai & Li, the legal advisors to Asean Resources as to Hong Kong law at 20th Floor, Gloucester Tower, The Landmark, Central, Hong Kong from the date of this circular up to and including the date of the special general meeting:

the memorandum of association and the bye-laws of Asean Resources;
the memorandum of association and the articles of association of Besteam;
the management contract;
the letter from the independent board committee to the independent shareholders of Asean Resources, the text of which is set out on page 29 of this circular;
the letter of advice from Somerley dated 10th April, 2003, the text of which is set out on pages 30 to 59 of this circular;
the letters of consent referred to in section headed “Experts and consents” of this appendix;
the annual reports of Asean Resources for the two years ended 31st March, 2002 and the interim report of Asean Resources for the six months ended 30th September, 2002;
the material contracts referred to in the section headed “Material contracts” in this appendix;
the unaudited pro forma financial information on the Asean Resources group and the Besteam group upon the implementation of the group reorganisation as contained in appendices II and III to this circular respectively;
the letters, summary of valuations and valuation certificates from DTZ, the texts of which are set out in appendices V and VI to this circular; and
the letters dated 10th April, 2003 from each of PricewaterhouseCoopers and Anglo Chinese in respect of the unaudited pro forma financial information on the Asean Resources group and the Besteam group upon the implementation of the group reorganisation.

– 156 –

NOTICE OF THE SPECIAL GENERAL MEETING

ASEAN RESOURCES HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

NOTICE IS HEREBY GIVEN that a special general meeting of Asean Resources Holdings Limited (the “company”) will be held at 10:30 a.m. on Monday, 5th May, 2003 at Garden Room, 2nd Floor, Hotel Nikko Hongkong, 72 Mody Road, Tsimshatsui East, Kowloon, Hong Kong for the purpose of considering and, if thought fit, passing, with or without modification, the following special and ordinary resolutions, as the case may be, of the company:

SPECIAL RESOLUTIONS

“ THAT the existing bye-laws of the company be and are hereby amended in the following manner:–
(a) by inserting the following new bye-law 137 in place of the existing bye-law 137:–
- “137. Subject to the Act, the Board or the Company in general meeting may from time to time declare dividends in any currency to be paid to the Members, but no dividend shall be declared in excess of the amount recommended by the Board.”; and
(b) by deleting the existing bye-laws 138 and 140.”
“ THAT subject to:–
(1) compliance of section 46(2) of the Companies Act 1981 of Bermuda;
(2) the agreement of the bankers of the company and its subsidiaries (the “group”), if required, to the release of guarantees given by the company and any of its retained subsidiaries on the obligations of Besteam Limited (“Besteam”), a wholly-owned subsidiary of the company as at the date hereof, or its subsidiaries following the implementation of the group reorganisation, as hereinafter defined;
(3) the consent, if required, of any of the group’s joint venture partners; and
(4) any other third parties’ consent or approval, including regulatory consents, required to give effect to the group reorganisation,

the reorganisation of the group in the following manner (the “group reorganisation”) be and is hereby approved and adopted:–

(a) all interests of the group, other than its interests in the commercial podium of Elizabeth House in Causeway Bay, Hong Kong (“Elizabeth House”) and cash of not less than HK$707.5 million, subject to adjustment, comprising principally interests of approximately 24.8% in JW Marriott Hotel Hong Kong in Admiralty, Hong Kong, approximately 47.7% in Hotel Nikko Hongkong in Tsimshatsui, Kowloon, Hong Kong, 57% in a residential redevelopment project at Nos. 33 and 35 Island Road, Hong Kong, 55% in the remaining unsold units of The Colonnade, a residential development at 152 Tai Hang Road, Hong Kong, various investment properties and properties held

– 157 –

NOTICE OF THE SPECIAL GENERAL MEETING

for or under development, being primarily holdings of agricultural land in the New Territories, Hong Kong, will be transferred to Besteam by way of acquisition of a number of intermediate holding companies, assignment of various intergroup loans undertakings of the group and repayment of cash by Besteam to the group;

(b) immediately after transfer of the interests of the group to Besteam as set out in paragraph (a) above, the shares in Besteam will be distributed to the shareholders of the company whose names are registered at the close of business on 5th May, 2003 in the register of members of the company on a one for one basis by a cancellation and distribution of the share premium in the share premium account of the company of approximately HK$929.8 million as at the latest practicable date of the circular of the company dated 10th April, 2003 and a distribution of a portion of the retained earnings of the company; and
(c) the directors of the company be and are hereby authorised generally to take any and all steps and to do and, or procure to be done any and all acts and things, and to approve, sign and execute any documents which in their absolute discretion consider to be necessary, desirable or expedient to implement and carry into effect the group reorganisation.”

ORDINARY RESOLUTION

“ THAT subject to completion of the group reorganisation, as defined in special resolution numbered 2 of the notice of the meeting (the “notice”) of which this resolution forms part:–
(a) subject to all necessary consents and approval having been obtained, the management contract (the “management contract”) to be entered into between, inter alia, Winsworld Properties Limited and Verywell Services Limited (“Verywell”), a copy of the management contract has been produced to the meeting marked “A” and signed by the chairman of the meeting for identification purpose, whereby Verywell will manage, deal with and handle all matters in relation to the management of Elizabeth House, as defined in special resolution numbered 2 of the notice, upon the terms and subject to the conditions therein contained, be and is hereby approved and that the directors of the company be and are hereby authorised to take any and all steps and to do and, or procure to be done any and all acts and things, and to approve, sign and execute any documents which in their absolute discretion consider to be necessary, desirable or expedient to implement and carry into effect the management contract;
(b) the share option agreement dated 18th March, 2003 (the “share option agreement”) entered into between the company and its directors and full-time employees (collectively the “optionholders”) relating to the options granted by the company to the optionholders pursuant to the share option scheme of the company adopted on 8th September, 1998 (the “share option scheme”), a copy of the share option agreement has been produced to the meeting marked “B” and signed by the chairman of the meeting for identification purpose, and the transactions contemplated thereunder be and are hereby approved and the entering into of the share option agreement by the company be and is hereby approved, confirmed and ratified and that the directors of the company be and are hereby authorised to take any and all steps and to do and, or

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NOTICE OF THE SPECIAL GENERAL MEETING

procure to be done any and all acts and things, and to approve, sign and execute any documents which in their absolute discretion consider to be necessary, desirable or expedient to implement and carry into effect the terms of the share option agreement.”

By order of the board Yuen Lai Sheung Company Secretary

Hong Kong, 10th April, 2003

Registered office:– Principal place of Clarendon House business in Hong Kong:– Church Street 39th Floor Hamilton HM 11 New World Tower I Bermuda 18 Queen’s Road Central Hong Kong

Notes:

Any member of the company entitled to attend and vote at the meeting to be convened by the above notice is entitled to appoint another person as his proxy to attend and vote in his stead. A proxy need not be a member of the company.
A form of proxy in respect of the meeting is enclosed. Whether or not you intend to attend the meeting in person, you are requested to duly complete, sign and return the form of proxy in accordance with the instructions printed thereon.
To be valid, the form of proxy, together with any power of attorney or other authority, if any, under which it is signed or a certified copy of that power of attorney or authority must be lodged at the Hong Kong branch share registrars of the company, Tengis Limited at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong, not less than 48 hours before the time appointed for the meeting or any adjournment thereof.
Where there are joint registered holders of any share(s) of the company, any one of such joint holders may vote at the meeting either personally or by proxy in respect of such share(s) as if he were solely entitled thereto; but if more than one of such joint holders be present at the meeting personally or by proxy, that one of such joint holders so present whose name stands first on the register of members of the company in respect of such share(s) shall alone be entitled to vote in respect thereof.
Completion and return of the form of proxy shall not preclude a member of the company from attending and voting in person at the meeting or any adjourned meeting should he so wish and, in such event, the instrument appointing a proxy shall be deemed to have been revoked.

– 159 –

AI assistant

International Genius Company — Proxy Solicitation & Information Statement 2003

48889_rns_2003-04-10_3053741d-f38a-490c-b83b-297f75478f22.pdf

ASEAN RESOURCES HOLDINGS LIMITED

BESTEAM LIMITED

GROUP REORGANISATION, AMENDMENTS TO THE BYE-LAWS,

CORPORATE FINANCE, LIMITED

SOMERLEY LIMITED

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

ASEAN RESOURCES HOLDINGS LIMITED

GROUP REORGANISATION, AMENDMENTS TO THE BYE-LAWS, SIGNING OF THE MANAGEMENT CONTRACT (SPECIAL DEAL), CANCELLATION OF THE SHARE OPTIONS IN ASEAN RESOURCES AND EXTENSION OF THE OPTION PERIOD

INTRODUCTION

THE GROUP REORGANISATION

The effect of the group reorganisation

LETTER FROM THE BOARD

The mechanics of the group reorganisation

for each Asean Resources share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . one Besteam share

The conditions of the group reorganisation

Asean Resources group and shareholding structure immediately before and immediately after the implementation of the group reorganisation

Unaudited pro forma financial information on the Asean Resources group upon the implementation of the group reorganisation

Unaudited pro forma combined profit and loss account

Unaudited pro forma financial information on the Besteam group upon the implementation of the group reorganisation

Unaudited pro forma combined profit and loss account

Reasons for the group reorganisation

LETTER FROM THE BOARD

AGREEMENTS

Preliminary and sale and purchase agreements

The conditions of the sale and purchase agreement

LETTER FROM THE BOARD

The asset injection agreement

The Mexan Holdings acquisition

Reasons for the Mexan Holdings acquisition

Loan facility agreement

POSSIBLE MANDATORY OFFER FOR ASEAN RESOURCES SHARES

The Asean Resources offer

for each Asean Resources share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$0.8784 in cash

Background and intentions of Mexan Group regarding Asean Resources

Management contract for the Elizabeth House

LETTER FROM THE BOARD

Continuing connected transaction

Proposed new directors of Asean Resources

POSSIBLE VOLUNTARY OFFER FOR BESTEAM SHARES

The Besteam offer

Closing of register of members

Certificates for the Besteam shares

Intentions of United Goal Development regarding Besteam

Compulsory redemption

THE EFFECTS OF THE ASEAN RESOURCES OFFER AND THE BESTEAM OFFER

CANCELLATION OF THE ASEAN RESOURCES SHARE OPTIONS

GENERAL

SPECIAL GENERAL MEETING

RECOMMENDATION

ADDITIONAL INFORMATION

ASEAN RESOURCES HOLDINGS LIMITED

GROUP REORGANISATION, AMENDMENTS TO THE BYE-LAWS, SIGNING OF THE MANAGEMENT CONTRACT (SPECIAL DEAL), CANCELLATION OF THE SHARE OPTIONS IN ASEAN RESOURCES AND EXTENSION OF THE OPTION PERIOD

Cheung Hon Kit

ASEAN RESOURCES GROUP REORGANISATION, MANAGEMENT CONTRACT RE ELIZABETH HOUSE (SPECIAL DEAL) AND THE SHARE OPTION AGREEMENT

INTRODUCTION

THE ASEAN RESOURCES GROUP REORGANISATION, ASEAN RESOURCES OFFER AND BESTEAM OFFER

(i) Elizabeth Asean

(b) Asean Resources offer

for each Asean Resources share . . . . . . . . . . . . . . . . . . . . . HK$0.8784 in cash.

(ii) Besteam

for each Asean Resources share . . . . . . . . . . . . . . . . . . . . . . . . . . one Besteam share.

(iii) Conditions of the Reorganisation

PRINCIPAL FACTORS TAKEN INTO ACCOUNT

1. Background to and reasons for the Transactions

LETTER FROM SOMERLEY

LETTER FROM SOMERLEY

2. Effects of the Reorganisation

3. Financial and other information on Elizabeth Asean and Besteam

(a) Elizabeth Asean

LETTER FROM SOMERLEY

Notes

(iv) Management and future policy

(v) Asean Resources offer

(vi) Asset injection

International Genius Company Proxy Solicitation & Information Statement 2003