RESULTS SUMMARY

The Group reported an operating loss of HK$39 million during the first half of the year and the Group's turnover of continuing operations declined by 20% compared with the same period last year.

Exceptional gains from ordinary activities which amounted to HK$101 million included profit on disposal of shops and foreign exchange gain on Swiss Franc convertible notes. The Group's share of losses in its associate company, Bangkok Land Public Company Limited ("Bangkok Land") was HK$34.8 million for the period under review. Group profit attributable to shareholders was HK$28 million.

The Group has written down the value of its investment in Bangkok Land in the sum of HK$685 million to reflect the depreciation in value on the Thai Baht. The amount of HK$685 million has been written off against reserves (in accordance with the applicable provision of the Statement of Standard Accounting Practice on foreign currency translation) and will have no impact on the Group's cash flow position.

RESULTS

The unaudited consolidated Group results are set out below.

Notes:-

1. Exceptional items

* Inclusive of deposit forfeited in a total sum of HK$4.36 million upon purchaser's failure to complete the sale and purchase agreement (1996: Nil).

2. Taxation

Hong Kong profits tax has been provided at the rate of 16.5% (1996: 16.5%) on the estimated assessable profit for the period less relief for available tax losses. Tax on overseas profits has been calculated on the estimated assessable profits for the period at the rates of taxation prevailing in the countries in which the Group operates.

3. Earnings per share

Earnings per share is calculated based on the profit attributable to shareholders of HK$28,064,000 (1996: HK$81,330,000) and on the weighted average of 936,116,339 shares (1996: 936,106,992 shares) in issue during this period.

The fully diluted earnings per share is based on adjusted earnings of HK$40,482,431 (1996: HK$86,136,713) on the assumptions that all the convertible notes outstanding had been converted into shares on 1st April, 1997 with interest saving of HK$4,849,496 (1996: HK$5,756,543) less taxation and that all the outstanding warrants had been exercised on 1st April, 1997, and all the options outstanding had been exercised at the issue date respectively and the proceeds had been placed on fixed deposits with a leading bank earning interest for the relevant period, and on the weighted average of 1,240,137,259 shares (1996: 1,050,790,178 shares) that would have been in issue.

PURCHASES, SALE AND REDEMPTION OF SHARES AND CONVERTIBLE NOTES

During the six months ended 30th September, 1997, there were no purchases, sales or redemption by the Company or any of its subsidiaries of the Company's shares and convertible notes.

INTERIM DIVIDEND

In order to retain sufficient cash for future development, the directors have resolved not to declare an interim dividend for this period (1996: 1 cent per share).

REVIEW

Retail and Trading

With the economic downturn affecting many of the Asian countries where the Group operates, the Group's retail and trading business has been significantly affected for the period under review.

Turnover for the Retail and Trading Division decreased by 10% compared with the same period last year. Turnover in South East Asia increased by 3% over the corresponding period last year but due to weakened currencies, a 14% decrease in turnover was recorded in terms of the Hong Kong dollar. Profits before tax for this Division decreased by 140% compared with the same period last year.

Our export and overseas subsidiaries of our watch division did not perform as well as anticipated during the period but the situation has improved since October this year. Given the relatively stronger European currencies, performance of our watch export business is expected to maintain a level comparable to last year. Our watch division will continue to strengthen its brand portfolio by acquiring or obtaining licensing rights to well-known brandnames to strengthen our export turnover.

The pace of franchising of Optical 88 shops has slowed down due to the poor local economic climate. However, the Group will continue with its franchising strategy over the medium to longer term period, when the local economic climate improves. All 10 shops franchised so far have performed satisfactorily.

Property Investment

The occupation permit for Stelux House is expected to be issued in early January 1998. Response to leasing has so far been positive and is progressing well. With the issue of the occupation permit, the take up rate of units in Stelux House is expected to accelerate. The Group will continue to hold the property for rental investment income. The relocation of the Group headquarters to Stelux House is now expected to be at the end of March 1998. Our existing assembly facilities, at our Kowloon Bay premises, which will be expanded so as to position ourselves for increased export sales to Europe and America, will take up the premises left vacant by the relocation.

During the period, the Group disposed of several shop premises. In Hong Kong, 5 shops were disposed of and in Singapore, a further 2 properties were sold. Net gain from the disposal amounted to HK$96 million. In October of this year, another local property was disposed of for HK$167 million. Net gain from the disposal amounts to approximately HK$110 million and will be booked in the second half year. The Group still owns 6 shop premises in Hong Kong.

Equity Investment

The Group holds a 10.6% interest in Bangkok Land as a long term investment and has been accounted for as an associated Company. We continue to believe that this investment is viable and at this stage there are no plans to dispose of it.

Sales of units in popular condominium in Muang Thong Thani at discounted prices have been very well received with around 6,000 units sold so far. Due to this very encouraging response, Bangkok Land has plans to dispose of some of its other developments also at attractively discounted prices.

Bangkok Land has also recently signed two separate contracts with respect to the sale of residential property with the Thai Ministry of Defence and the Thai Supreme Command Headquarters for 1,271 million Thai Baht and 932 million Thai Baht respectively.

On 18th November, 1997, Bangkok Land paid the overdue annual interest of USD4,474,395.00 on its USD150,000,000.00 Exchangeable Notes.

Notwithstanding the above positive developments, a write down of HK$685 million has been made to reflect the depreciation in value of the Thai Baht against the Hong Kong dollar. The amount of HK$685 million has been written off against reserves (in accordance with the applicable provision of the Statement of Standard Accounting Practice on foreign currency translation) and will have no impact on the Group's cash flow position.

The Directors of the Company will continue to closely monitor developments at Bangkok Land in terms of their financial impact on the Group and will review the situation again at the end of the financial year.

DISPOSAL OF TITUS SQUARE

Several independent third parties have expressed interest in the Group's commercial development, Titus Square located at Tsimshatsui. Discussions and negotiations for the sale of Titus Square are proceeding with one party and are expected to be finalised soon. The Company will make a further announcement in the event an agreement for sale and purchase is signed.

OUTLOOK

Since consumer sentiment will continue to be weak and with the current high and unstable interest rates, the Group will not continue with expansion plans in Asia but will consolidate its Asian operations and implement general cost cutting. The Group also considers it appropriate to release funds in fixed assets to decrease the Group's bank borrowings. The Group will concentrate on export sales to Europe and America where economies are still buoyant.

CODE OF BEST PRACTICE

The Directors are not aware of any information that would reasonably indicate that the Company is not, or was not during the six months ended 30th September, 1997, in compliance with the Code of Best Practice as set out in the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited except that the independent non-executive directors of the Company are not appointed for a specific term.

On behalf of the Board
Joseph C. C. Wong
Managing Director

Hong Kong, 30th December, 1997

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