IRC Limited — Interim / Quarterly Report 2003

Apr 17, 2003

Listed Company Information

LAI SUN DEV<00488> - Results Announcement Lai Sun Development Company Limited announced on 17/4/2003: (stock code: 00488 ) Year end date: 31/7/2003 Currency: HKD Auditors' Report: N/A Review of Interim Report by: Audit Committee (Unaudited ) (Unaudited ) Last Current Corresponding Period Period from 1/8/2002 from 1/8/2001 to 31/1/2003 to 31/1/2002 Note ($ ) ($ ) Turnover : 548,793,000 546,515,000 Profit/(Loss) from Operations : 223,613,000 155,694,000 Finance cost : (260,470,000) (306,232,000) Share of Profit/(Loss) of Associates : (9,920,000) (116,452,000) Share of Profit/(Loss) of Jointly Controlled Entities : N/A N/A Profit/(Loss) after Tax & MI : (105,877,000) (289,557,000) % Change over Last Period : N/A % EPS/(LPS)-Basic (in dollars) : (0.03) (0.08) -Diluted (in dollars) : N/A N/A Extraordinary (ETD) Gain/(Loss) : N/A N/A Profit/(Loss) after ETD Items : (105,877,000) (289,557,000) Interim Dividend : NIL NIL per Share (Specify if with other : N/A N/A options) B/C Dates for Interim 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. LOSS PER SHARE The calculation of basic loss per share is based on the net loss from ordinary activities attributable to shareholders for the period of HK$105,877,000 (2002: HK$289,557,000) and the weighted average number of 3,746,002,000 (2002: 3,746,002,000) ordinary shares in issue during the period. Diluted loss per share amounts for the current and prior periods have not been disclosed, as the potential ordinary shares of the Group outstanding during these periods had an anti-dilutive effect on the basic loss per share for these periods. 2. MERGEFORMAT BASIS OF PRESENTATION (a) The condensed consolidated financial statements have not been audited by the Company's auditors but have been reviewed by the Company's audit committee. (b) The Group sustained a net loss from ordinary activities attributable to shareholders of HK$106 million for the six-month period ended 31st January, 2003. The Group is currently having ongoing discussions with all of its creditors with the objective of re-equipping the Group with a cleaner bill of financial health. On 17th December, 2002, meetings of the US$115 million exchangeable guaranteed bonds (the "Exchangeable Bonds") and the US$150 million convertible guaranteed bonds (the "Convertible Bonds") (collectively, the "Bonds") were held at which, among other things, the resolutions to approve the deferral of the Group's repayment obligation under the Exchangeable Bonds and the Convertible Bonds to 31st March, 2003 were duly passed. The principal lending banks of the Group had also agreed to reschedule the loan principal repayments of the Group to not earlier than 31st March, 2003. As at the date of this report, the Company has yet to reach an agreement with the Bondholders and the Group's other creditors on the terms of a comprehensive restructuring of the Group's debt, including a restructuring of the Bonds. As the Convertible Bonds were due to be redeemed on 31st March, 2003 but were not so redeemed and, in consequence of the Company failing to satisfy, on the same day, certain put rights exercised by certain of the Exchangeable Bondholders in respect of their holdings of Exchangeable Bonds, which in turn, is likely to result in the Exchangeable Bonds becoming due for redemption in their entirety, the Company will default on both the Convertible Bonds and the Exchangeable Bonds. This default is, in turn, likely to constitute a technical event of default under the Group's principal banking facilities. However, the Company is continuing its discussions with the Bondholders and its other creditors and the Directors believe that agreement on a comprehensive debt restructuring is capable of being achieved during the next quarter. In the meantime, the Directors expect that the Group will enter into a period of informal standstill, during which the Bondholders and the Group's other creditors, whilst reserving all of their rights, will resist taking action to enforce their respective security pending the outcome of discussions with the Company on the comprehensive debt restructuring. On the assumption that the Group will be able to secure the agreement of all of its creditors to finalise the form and structure of a debt restructuring program and, at the same time, to continue the successful orderly disposals of the necessary assets of the Group and to raise funds through other financing or refinancing arrangements to generate additional positive cashflow, the Directors believe that the Group will have sufficient working capital for its requirements for the ensuing year. Otherwise, the directors of the Company are of the opinion that the Group would not have adequate funds to enable it to operate as a going concern in the foreseeable future. If the going concern basis is not appropriate, adjustments would have to be made to restate the values of the assets to their recoverable amounts, to provide for any further liabilities which might arise and to reclassify non-current assets and liabilities as current assets and liabilities, respectively. 3. INTERESTS IN ASSOCIATES Included in the Group's interest in associates as at 31st January, 2003 was the Group's share of net assets of eSun Holding Limited ("eSun") and its subsidiaries (the "eSun Group"). As at 31st December, 2002, there was an amount due to the eSun Group by Furama Hotel Enterprise Limited ("FHEL"), a wholly owned subsidiary of the Company, of HK$1,500,040,000 (the "Debt"). In respect of the recoverability of the Debt, the directors of eSun considered that pending the outcome of the debt restructuring program of the Company as detailed in note 1 to the condensed consolidated financial statements, eSun is uncertain as to the extent of the recovery of the Debt. However, in the absence of any reliable information the directors of eSun are unable to estimate the amount of any specific provision against such balance at the current time. As at 31st December, 2002, the film rights of the eSun Group represented all rights, titles and interests in 96 films (the "96 Film Rights") of HK$93,606,000 and the television broadcasting rights for a period of 10.5 years in another 20 films ("20 Film Rights") of HK$19,503,000. The directors of eSun have engaged an independent films distributor (the "Valuer") to perform a valuation (the "Valuation") on the 96 Film Rights as at 31st December, 2002. Having regard to the Valuation, which indicated that the fair value of the 96 Film Rights as at 31st December, 2002 was above their costs as stated in the eSun Group's consolidated financial statements and having regard to the current market conditions, the directors of eSun are of the opinion that there were no impairment in the Group's films rights as at 31st December, 2002. The auditors of eSun had issued (i) a disclaimer opinion stating that they were unable to form an opinion in respect of the recoverability of the Debt and (ii) a qualified opinion stating that they were unable to carry out the auditing procedures, as required by Statement of Auditing Standard 520 "Using the Work of an Expert", to satisfy themselves as to (1) the competence and objectivity of the Valuer; and (2) the adequacy of the scope of the Valuer's work as to the 96 Film Rights and they were also unable to obtain sufficient reliable information, or carry out alternative auditing procedures to satisfy themselves as to the eSun's directors' assessment in connection with the carrying value of the 20 Film Rights. As mentioned above, included in the Group's share of net assets of associates was the Group's share of net assets of the eSun Group, which included the Debt, whilst the Debt was also included in the Group's balance sheet as current liabilities. As the effect of any provision for the recoverability of the Debt to be made by eSun shall be reversed in the condensed consolidated financial statements of the Group, the directors of the Company considered that there was no material impact on the Group's condensed consolidated financial statements in respect of the qualified opinion issued by the auditors of eSun. As regards the film rights of the eSun Group, having considering all the facts stated above, the directors of the Company concurred with the view of eSun's directors on the assessment of the carrying value of the film rights and concluded that no adjustments need to be made in the Group's condensed consolidated financial statements.