08:39     LAI SUN DEV<00488> - Results Announcement (3)                       

                                                                              
    The directors of eSun believe that the eSun Group will be successful in   
    obtaining ongoing support from its Financial Creditors and in exploring   
    opportunities for different sources of financing and that it will be      
    successful in improving cash flow through tightening of cost controls and 
    attaining positive and profitable cash flow operations.  On this basis,   
    the directors of eSun consider that the eSun Group will have sufficient   
    working capital to finance its operations in the foreseeable future.      
    Accordingly, the directors of eSun are satisfied that it is appropriate to
    prepare the financial statements on a going concern basis.                
                                                                              
    If the going concern basis was 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.  The effects of these potential adjustments have not been   
    reflected in the eSun Group's financial statements.                       
                                                                              
    At 31st December, 2004, the film rights of the eSun Group represented all 
    rights, titles and interests in 127 films (the "127 Film Rights") with an 
    aggregate carrying value of HK$190,570,000 (2003: HK$197,541,000) and the 
    television rights to another two films for a period of 10.5 years (the "2 
    TV Rights") of with an aggregate carrying value of HK$114,000 (2003: HK$  
    114,000).  The directors of eSun engaged Astoria Films Distribution       
    Limited (the "Valuar"), an independent film distributor, to perform a     
    valuation (the "Valuation") on the 127 Film Rights as at 31st December,   
    2004.  Having regard to the Valuation, which indicated that the fair value
    of the 127 Film Rights as at 31st December, 2004 was above their carrying 
    value stated in the eSun Group's financial statements and having regard to
    the current market conditions, the directors of eSun are of the opinion   
    that there was no impairment in the Group's film rights as at 31st        
    December, 2004.                                                           
                                                                              
    The auditors of eSun have issued a qualified opinion on the financial     
    statements of the eSun Group for the year ended 31st December, 2004 in    
    respect of the scope limitation of the carrying value of film rights.  In 
    their report, the auditors state that they have been unable to obtain     
    sufficient reliable information to carry out the audit procedures required
    by the Statement of Auditing Standards 520 "Using the Work of an Expert"  
    ("SAS 520") issued by the HKICPA, to satisfy themselves as to (i) the     
    competence and objectivity of the Valuer; and (ii) the adequacy of the    
    scope of the Valuer's work on the 127 Film Rights.   Accordingly, they    
    have been unable to carry out adequate audit procedures to assess the     
    carrying amount of the film rights as at 31st December, 2004.  Included in
    the consolidated profit and loss account for the year ended 31st December,
    2004 is an amortisation charge of the eSun Group's film rights of HK$6,   
    971,000.  They are also unable either to obtain sufficient reliable       
    information, or to carry out alternative audit procedures to satisfy      
    themselves as to the appropriateness of the basis of computation of the   
    amortisation charge.                                                      
                                                                              
    For more details, please refer to the press announcement today.