09:24 LAI SUN DEV<00488> - Announcement (4) The audited consolidated turnover of FIHL for the financial years ended 31 July 2004 and 2003 attributable to Company's audited consolidated profit and loss accounts was approximately HK$49 million and HK$48 million, respectively. The audited consolidated net profits (both before and after taxation and extraordinary items) of FIHL for the financial years ended 31 July 2004 and 2003 attributable to the Company's audited consolidated profit and loss accounts was approximately HK$3.3 million and HK$1.3 million respectively. The audited consolidated total assets of FIHL as at 31 July 2004 attributable to the Company's audited consolidated balance sheet was approximately HK$192 million. The audited consolidated net asset value of FIHL as at 31 July 2004 attributable to the Company's audited consolidated balance sheet, after elimination of intra-group balances, was approximately HK$131 million. The Outstanding Fee, as at 31 July 2004 was approximately HK$10 million. The outstanding balance of the Shareholder Debt as at 31 July 2004 was approximately HK$194 million. Taking into account the consideration of US$16,800,000 (being approximately HK$131 million) for the Assets the estimated loss arising from the disposal by LSD Group of the Assets will be approximately HK$10 million before expenses. The estimated loss arising from the disposal is calculated based on the audited consolidated net asset value of FIHL as at 31 July 2004 and the Outstanding Fee as at 31 July 2004. Accordingly, the actual loss to be recorded in the Company's consolidated profit and loss account will be recalculated based on the actual consolidated net asset value of FIHL attributable to the Company and the actual amount of Outstanding Fee as at the date of Closing, and is expected to be different from the amount disclosed above. On Closing, FIHL, IBH, BCF and IBHJV will cease to be subsidiaries of the LSD Group and their assets and liabilities will no longer be included in the Company's consolidated balance sheet. IV. REASONS FOR AND BENEFITS OF THE TRANSACTION AND USE OF PROCEEDS The Company will use the entire proceeds of the Transaction which is US$16,800,000 (being approximately HK$131 million), but not the management fee payable to FHRI by Vina or IBHJV which is US$1,400,000 (being approximately HK$11 million), for the partial repayment of the Series A Bonds. This is a commitment of the Company to raise funds to reduce or eliminate the indebtedness of approximately HK$266 million owed by the Company to the holders of the Series A Bonds. The entire proceeds of the Transaction except for the US$1,400,000 (being approximately HK$11 million) will be paid by the Escrow Agent directly to Law Debenture Corporation (H.K.) Limited acting as security trustee in relation to the Series A Bonds. FHRI will retain the US$1,400,000 to complete the future performance of services under the Operation and Management Agreement. V. GENERAL The Company is a holding company with interests in subsidiaries and associates. The principal business activities of the Company and its subsidiaries include property investment, property development for sale, investment in and operation of hotels and restaurants and investment holding. The principal business activities of the associates of the Company include media, entertainment, internet and technology oriented businesses and satellite television operations. The Sellers, which are two wholly owned subsidiaries of the Company, are beneficially interested in the entire issued share capital of FIHL being 1,000 ordinary shares of US$1 each. The Company, through the Sellers and FIHL which is a wholly owned subsidiary of the Sellers, is the beneficial owner of 83.5% of the share capital of each of BCF and IBH being 835 ordinary shares of US$1 each in the share capital BCF and 167,084 ordinary shares of US$1 each in the share capital of IBH. The remaining 16.5% of the share capital in each of BCF and IBH is owned by companies whose ultimate beneficial owners are, third parties independent of the Company and connected persons of the Company, save for the companies being substantial shareholders of BCF and IBH respectively. IBH is the holder of a 75% interest in the capital contribution of IBHJV which owns 100% of the Furama Resort. The remaining 25% of the share capital of IBHJV is owned by a company whose ultimate beneficial owner is, a third party independent of the Company and connected persons of the Company, save for the company being a substantial shareholder of IBHJV. Therefore, the Sellers indirectly own a 62.63% interest in the capital contribution of IBHJV.