Regent Pacific Group Limited — Earnings Release 2001

Sep 3, 2001

Listed Company Information

IREGENT GROUP<00575> - Results Announcement (Summary) iRegent Group Limited announced on 31/8/2001: (stock codes: Ord: 575 & War: 633) Year end date: 31/3/2001 Currency: USD (Audited) (Audited) Last Current Corresponding Period Period from 1/4/2000 from 1/4/1999 to 31/3/2001 to 31/3/2000 ('000) ('000) Turnover : (744) 54,658 Profit/(Loss) from Operations : (44,812) 66,665 Share of Profit/(Loss) of Associates : (53,440) 32,178 ---------------------------- Finance cost : (358) (462) Share of Profit/(Loss) of Jointly Controlled Entities : - - ---------------------------- Profit/(Loss) before taxation : (98,610) 98,381 Taxation : (2,840) (12,283) ---------------------------- Profit/(Loss) after taxation : (101,450) 86,098 Minority interests : 3,119 (534) ---------------------------- Profit/(Loss) after Tax & MI : (98,331) 85,564 % Change over Last Period : N/A EPS/(LPS)-Basic : (US 8.5 cents) US 9.3 cents -Diluted : - - Extraordinary (ETD) Gain/(Loss) : - - Profit/(Loss) after ETD Items : (98,331) 85,564 Final Dividend per Share : Nil US 0.50 cent (3rd Int Div) (Specify if with other options) : - - B/C Dates for Final Dividend : N/A Payable Date : N/A B/C Dates for (-) General Meeting : N/A Other Distribution for Current Period : N/A B/C Dates for Other Distribution : N/A Remarks: (1) Operating (loss)/profit on core activities The effect on the consolidated results for the year ended 31 March 2001 of acquisitions and disposals of subsidiaries was as follows:- Continuing Operations Discontinued Operations (note a) Previously Disposal or Existing Acquisitions Distribution Total US$'000 US$'000 US$'000 US$'000 -------------------------------------------------------------------------- Turnover: Asset management 5,713 -- 1,455 7,168 Corporate finance 41 -- 232 273 Property management -- -- 463 463 Corporate investment (5,365) (3,594) (2,342) (11,301) Internet retailing -- 2,653 -- 2,653 -------------------------------------------------------------------------- 389 (941) (192) (744) Expenses: Personnel costs (3,678) (2,255) (898) (6,831) Marketing costs (200) (2,911) (12) (3,123) Cost of internet goods sold -- (2,780) -- (2,780) Other costs (3,751) (3,863) (1,527) (9,141) -------------------------------------------------------------------------- (7,240) (12,750) (2,629) (22,619) Exceptional items: Profit on sale of interests in associated companies (note b) -- -- 18,845 18,845 Profit on deemed disposal of subsidiary (note c) -- -- 1,926 1,926 Exceptional gain on discontinuance of activity in associated company (note d) -- -- 29,186 29,186 Impairment of goodwill on discontinuance of activity in associated company (note e) -- -- (49,026) (49,026) Other impairment of goodwill (note e) 15,088 (38,212) -- (23,124) -------------------------------------------------------------------------- 7,848 (50,962) (1,698) (44,812) -------------------------------------------------------------------------- Share of (loss) of associated companies (18,846) (602) (33,992) (53,440) -------------------------------------------------------------------------- (10,998) (51,564) (35,690) (98,252) ========================================================================== (a) Changes in group structure The financial statements for the year ended 31 March 2001 reflect a number of structural changes to the Group as indicated in a circular sent to shareholders on 20 April 2000 and reflected by means of an unaudited proforma on page 59 of the published financial statements as at 31 March 2000. The proforma set out the anticipated effects of: - Acquisition of Interman Holdings Limited - Distribution of controlling interest in Regent Europe Limited - Acquisitions by KoreaOnline Limited of a controlling interest in Regent Insurance Co Ltd - Issue of new shares pursuant to the exercise of options Interman Holdings Limited was acquired on 16 May 2000 and, contrary to the presentation adopted in the proforma, has been fully consolidated. Its major investment bigsave Holdings plc was originally expected to be treated as a long term investment but the board has decided it would be more appropriate to consolidate its figures fully. In accordance with generally accepted accounting practice, the overall consideration for the transaction has been restated based on HK$1.60 per share, the price ruling on completion, rather than the HK$2.80 per share used when the transaction was originally announced. This leads to a share premium account increase of US$43,300,000. Regent Europe Limited (now Charlemagne Capital Limited) shares were distributed as a dividend as indicated in the same document. Accordingly on 31 May 2000, the Regent Europe Limited group of companies ceased to be subsidiaries and became an associated company. On 30 March 2001, the remaining stake in Regent Europe Limited was disposed of (note (b)(iii) below). (b) Profits on sale of interests in associated companies The net consolidated profits on sales of interests in associated companies relate to:- (i) On 20 March 2001, KoreaOnline Limited ("KOL") exercised a call option pursuant to an option agreement dated 7 November 2000 to acquire 8,000,000 "A" shares in SWKOL (Labuan) Limited from State of Wisconsin Investment Board ("SWIB"). In consideration of SWIB transferring such 8,000,000 "A" shares in SWKOL (Labuan) Limited, 6,000,000 new shares in KOL were issued to SWIB on 28 April 2001, which diluted the Company's holding in KOL to 40.2%. The exercise of this option increased the Group's share of the net assets of KOL, resulting in a deemed gain on disposal of US$19,566,000 after deducting goodwill of US$5,173,000. This matter was accounted for within the year ended 31 March 2001 as the terms of the call option were such that the exercise was irrevocable notwithstanding that the administration was incomplete at the end of the financial year. (ii) Certain directors of Charlemagne Capital Limited (then called Regent Europe Limited) entered into a share put option in relation to that company which was exercised in May 2000. As a result of the exercise, the Group incurred a loss of US$1,071,000. (iii) On 30 March 2001, the Group sold its remaining 20.56% stake in Charlemagne Capital Limited for US$6,271,000, realising a profit of US$350,000 above the then carrying value of the shareholding. (c) Profit on deemed disposal of subsidiary The profit on deemed disposal of subsidiary relates to the dilution of the Group's interest in bigsave Holdings plc (formerly BigSave.com Limited) due to the issue of further shares by bigsave Holdings plc to its minority shareholders. (d) Exceptional gain on discontinuance of activity in associated company Regent Insurance Co Ltd, a subsidiary of KoreaOnline Limited, had an overall deficit in shareholders' funds. The exceptional gain related to the reduction of the deficit on the discontinuance of its business. (e) Impairment of goodwill (i) Goodwill of US$38,632,000 previously eliminated against reserves relating to the investment in KoreaOnline Limited ("KOL"), an associated company, has been accounted for within the profit and loss account on the basis that the Directors consider its value has been impaired consequent on significant losses and the restructuring of that company. Of this amount, US$49,026,000 has been offset against the exceptional gain arising on discontinued activities within KOL and US$5,173,000 charged against deemed partial disposal of shareholding in KOL (note (b)(i) above). The credit balance of US$15,567,000 has been written off separately. (ii) Goodwill of US$36,488,000 arising as a result of the acquisition of Interman Holdings Limited and previously shown in the Group's interim figures as being eliminated against reserves has now been accounted for within the profit and loss account on the basis that the Directors consider its value has been impaired consequent on restructuring within bigsave Holdings plc, the major asset of Interman Holdings Limited. (iii) Net goodwill of US$2,203,000 arising as a result of a number of other acquisitions has been charged to the profit and loss account directly. Of this amount US$479,000 had previously been shown in published figures as being eliminated against reserves. 2001 2000 US$'000 US$'000 Goodwill taken to reserves: Balance at 1 April 2000 25,893 (11,846) Net goodwill arising on acquisitions 57,224 37,739 Transfer from goodwill reserve on dividend distribution (5,794) -- ------------------------ Balance at 31 March 2001 77,323 25,893 Charged to profit and loss account: On discontinuance of activities within KOL (49,026) -- Against deemed partial disposal of shareholding in KOL (5,173) -- Due to reorganisation of KOL 15,567 -- Due to impairment within Interman Holdings Limited (36,488) -- Other goodwill written off (2,203) -- ------------------------ Total included within reserves -- 25,893 ======================== (2) (Loss)/Earnings per share The calculation of loss/earnings per share is based on the net loss attributable to shareholders for the year of US$98,331,000 (2000: profit of US$85,564,000) and the weighted average number of shares of 1,156,543,357 shares (2000: 917,059,287 shares) in issue during the year. Diluted earnings per share is not presented, as the potential ordinary shares are not dilutive. For more details, please refer to the press announcement today.