IRC Limited — Earnings Release 2005

Nov 18, 2005

Listed Company Information

Listed Company Information
LAI SUN DEV<00488> - Results Announcement Lai Sun Development Company Limited announced on 18/11/2005: (stock code: 00488 ) Year end date: 31/07/2005 Currency: HKD Auditors' Report: Unqualified (Audited ) (Audited ) Last Current Corresponding Period Period from 01/08/2004 from 01/08/2003 to 31/07/2005 to 31/07/2004 Note ($ ) ($ ) Turnover : 788,799,000 2,109,513,000 Profit/(Loss) from Operations : 1,171,447,000 552,281,000 Finance cost : (115,048,000) (351,362,000) Share of Profit/(Loss) of Associates : 169,390,000 5,263,000 Share of Profit/(Loss) of Jointly Controlled Entities : N/A N/A Profit/(Loss) after Tax & MI 3 : (705,962,000) 381,435,000 % Change over Last Period : N/A % EPS/(LPS)-Basic (in dollars) 4 : (0.07) 0.10 -Diluted (in dollars) : N/A N/A Extraordinary (ETD) Gain/(Loss) : N/A N/A Profit/(Loss) after ETD Items : (705,962,000) 381,435,000 Final Dividend : NIL NIL per Share (Specify if with other : N/A N/A options) B/C Dates for Final Dividend : N/A Payable Date : N/A B/C Dates for (-) General Meeting : N/A Other Distribution for : N/A Current Period B/C Dates for Other Distribution : N/A Remarks: 1. CORPORATE UPDATE During the prior year, the Company reached an agreement, in principle, with the informal committee (the "Informal Committee") of the holders of exchangeable bonds and convertible bonds (the "Bondholders") concerning the settlement of HK$881 million payable under the exchangeable bonds ( principal amount of HK$622 million and accrued bond redemption premium of HK$259 million) (the "Exchangeable Bonds") and of HK$1,260 million payable under the convertible bonds (principal amount of HK$907 million and accrued bond redemption premium of HK$353 million) (the "Convertible Bonds") together with their accrued interests of HK$138 million owed by the Group to the Bondholders (the "Bonds Settlement"). The Bonds Settlement included the settlement of the outstanding principal amount, accrued bond redemption premium of the Exchangeable Bonds and the Convertible Bonds (collectively defined as the "Bonds") and outstanding accrued interest, amounted to approximately HK$2,279 million in total as at 31st July, 2004, and an agreed settlement premium of approximately US$ 33 million (equivalent to approximately HK$257 million). On 28th June, 2004, the Company and Furama Hotel Enterprises Limited ("FHEL"), a wholly-owned subsidiary of the Company, entered into a settlement agreement with eSun Holdings Limited ("eSun") (the "eSun Settlement Agreement") in connection with the settlement of an amount payable to Golden Pool Enterprise Limited ("GPEL"), a wholly-owned subsidiary of eSun, of approximately HK$1,500 million (the "Debt"). The eSun Settlement Agreement included an agreed settlement premium of approximately HK$1,345 million, which was to be payable to eSun upon the completion of the eSun Settlement Agreement. Further details of the principal terms of the Bonds Settlement and the eSun Settlement Agreement are set out in the Company's circular dated 15th September, 2004 (the "Circular"). On 6th October, 2004, the Bondholders held a meeting in accordance with the terms of the Bonds and passed the necessary resolutions to duly approve the terms of the Bonds Settlement agreed between the Informal Committee and the Company. Pursuant to a resolution passed at a special general meeting held by eSun on 13th October, 2004, the independent shareholders of eSun also approved the eSun Settlement Agreement. On the same date, pursuant to a resolution passed at the extraordinary general meeting held by the Company, the Bonds Settlement and the eSun Settlement Agreement (collectively, the " Settlements") were duly approved by independent shareholders of the Company. On 7th December, 2004, the Settlements were completed (the " Completion"). Further details on the Completion and other transactions in relation to the Settlements are described below. Bonds Settlement On 18th October, 2004, upon fulfilling certain specified conditions as set out in the Settlements, cash repayments of US$38 million (equivalent to approximately HK$300 million) were made to the Bondholders. Pursuant to the Bonds Settlement, the residual principal indebtedness in the amount of approximately HK$266 million (the "A Bonds") and a further principal amount of approximately HK$70 million (the "B Bonds") were issued to the Bondholders upon the Completion. These bonds are due for settlement by the Group on or before 31st December, 2005. Both the A Bonds and the B Bonds are interest-free and are secured. The remaining balance of approximately HK$1,900 million from the Bonds Settlement was satisfied by the issuance of approximately 3,800 million shares of the Company at the par value of HK$0.50 each (the "Bonds Settlement Shares"). With respect to the A Bonds, which are secured by, inter alia, (a) charges over the Group's entire 26.01% interest in Caravelle Hotel, Ho Chi Minh City, Vietnam, (b) charges over the Group's entire 62.625% interest in Furama Resort, Danang, Vietnam, (c) charges over the Group's entire 10% interest in the Waterfront, Hong Kong (collectively, the "Three Planned Sale Interests"), the Company agreed to procure the disposal of the Three Planned Sale Interests in an orderly and expeditious manner before 31st December, 2005 for the purpose of raising funds to repay the A Bonds. During the year, the Group disposed of its 62.625% equity interest in Furama Resort, Danang, Vietnam, being one of the Three Planned Sale Interests, to an independent third party for a consideration of US$16.8 million (equivalent to approximately HK$131 million) (the "Furama Resort Disposal"). As at 31st July, 2005, the Company redeemed the outstanding principal amount of the A Bonds. The remaining two assets under the Three Planned Sale Interests remained unsold as at 31st July, 2005. With respect to the B Bonds, Mr. Peter Lam, the Chairman, an executive director and a shareholder of the Company, granted to the bondholders a non-assignable right to put to him the Bonds Settlement Shares in two tranches with effect on 7th December, 2004 as follows: (i) 1,000,600,000 Bonds Settlement Shares (the "First Tranche Shares") at HK$0.07 per share, exercisable during a period commencing from two months after the Completion and ending by the end of the third month after the Completion; and (ii) 2,799,440,000 Bonds Settlement Shares (the "Second Tranche Shares ") at HK$0.03 per share, exercisable during a period commencing on 1st November, 2005 and ending on 30th November, 2005. No B Bond bondholders exercised their rights to put to Mr. Peter Lam for the First Tranche Shares, and the rights lapsed on 6th March, 2005. With respect to the Second Tranche Shares, certain of the bondholders had transferred a total of 1,301,303,612 Bonds Settlement Shares during the year which reduced the B Bonds' outstanding principal balance by HK$32, 567,000 to HK$37,492,000 as at 31st July, 2005. eSun Settlement Agreement On 18th October, 2004, upon the fulfilment of certain specific provisions set out in the eSun Settlement Agreement, a cash repayment of HK$20 million was made to GPEL. Another HK$225 million was restructured into a five-year secured interest -bearing term loan due by the Group to GPEL (the "eSun Loan"). The remaining balance of approximately HK$2,600 million related to the eSun Settlement Agreement was satisfied by the issuance of 5,200 million shares of the Company at the par value of HK$0.50 each (the "eSun Settlement Shares"), upon the completion of which the eSun Group became a 40.8% shareholder of the Company. Subsequent to the balance sheet date, the Group fully repaid the eSun Loan. For the year ended 31st July, 2005, the Group incurred a loss arising from the Settlements of HK$1,484 million which comprised (i) an agreed premium of HK$257 million pursuant to the Bonds Settlement and (ii) an agreed premium of HK$1,345 million pursuant to the eSun Debt Settlement of which was partially offset by the write back of accrued overdue interest on the Debt of HK$118 million as such overdue interest was waived by eSun upon completion of the Settlements. Bank and other borrowings As at 31st July, 2004, all outstanding bank and other borrowings of the Group were repayable within the next twelve months from that date and were classified as current liabilities. After the Completion, the majority of these outstanding bank and other borrowings were either rescheduled or refinanced with longer repayment terms. Following the Completion of the Settlements as described above, the Group turned around from a deficiency in asset position to a net asset position. As at 31st July, 2005 the Group had consolidated net assets ( excluding minority interest) of HK$3,432 million (2004: consolidated deficiency in assets (excluding minority interest) of HK$468 million ( restated)). In the wake of the successful rescheduling or refinancing of the Group's bank and other borrowings, the Group also turned around from a net current liability position of HK$5,670 million (restated) as at 31st July, 2004 to a net current asset position of HK$199 million as at 31st July, 2005. The directors of the Company are satisfied that the Group will be able to meet its financial obligations as and when they fall due in the foreseeable future. 2. EARLY ADOPTION OF HONG KONG FINANCIAL REPORTING STANDARDS The Group has resolved to early adopt all Hong Kong Financial Reporting Standards ("HKFRSs"), which also include all Hong Kong Accounting Standards and Interpretations issued by the Hong Kong Institute of Certified Public Accountants, in the financial year ended 31st July, 2005. All these early adopted HKFRSs are effective for accounting periods beginning on or after 1st January, 2005 for the preparation of these financial statements. Accordingly certain comparative figures have been restated. 3. PROFIT/(LOSS) AFTER TAXATION & MI The Group's profit/(loss) after taxation & MI is arrived at after charging/(crediting): 2005 2004 HK$'000 HK$'000 (Restated) Loss arising from the Settlements, net (1,483,527) - Gain on revaluation of investment properties 599,549 258,779 ========================== 4. EARNINGS/(LOSS) PER SHARE The calculation of basic loss per share is based on the loss for the year attributable to equity holders of the parent of HK$705,962,000 ( 2004: profit for the year attributable to equity holders of HK$381,435,000 (restated)) and the weighted average number of 9,589,864,000 (2004: 3,746,002,000) ordinary shares in issue during the year. Diluted earnings/(loss) per share amounts for the year ended 31st July, 2005 and 2004 have not been disclosed, as no diluting event existed during these years.