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1. Lai Sun auditors decline to sign off on financial statement

2. Please save historic mansion, says family

1. ReLai Sun auditors decline to sign off on financial statementnov
Foster Wong, The Standard 11 November 2002

Auditors of troubled Lai Sun Development have declined to sign off on its latest financial statements, increasing concern over the group's future.

The auditors, Ernst & Young, ``are not able to determine whether the going concern basis used in preparing the financial statements is appropriate'', and as a result have been unable to say the financial statements give a true and fair picture of the company.

The auditors say that the company's survival as a going concern depends on the agreement of bondholders and banks to a new restructuring plan and new financing arrangements together with the disposal of assets in order to generate additional cash flow. But they say there is ``significant uncertainty'' as to whether these new arrangements will happen.

Lai Sun has to repay liabilities of HK$6.19 billion in the next 12 months.

The company's net loss surged 62 per cent to HK$1.94 billion for the year to July 31. Net current liabilities rose sixfold to HK$6.19 billion, while consolidated net assets stood at only HK$766 million.

The company believed it would be able to secure a new restructuring and refinancing agreement as well as complete its asset disposal programme and therefore also believed it would have sufficient working capital to fund operations, it said in an announcement.

However, no agreement has been reached and the auditors questioned its financial statement as a result.
The auditors raised concerns about Lai Sun's adopting a ``going concern'' basis of presentation for its financial statements but chose not to qualify the accounts.

Since the Enron debacle, auditors have become tougher on troubled companies. A going concern is the basic accounting principle which refers to the ability of a firm to make enough money to stay afloat. If a company is not a going concern, it is insolvent.

Chairman Peter Lam said Lai Sun hoped to secure interim agreements with all creditors by year end.

``It is obvious that a substantial debt restructuring programme will be required in order to re-equip the group with a cleaner bill of financial health,'' he said.

The firm's short-term debts, which mature in the next 12 months, included HK$740 million in exchangeable bonds, HK$965 million in convertible guaranteed bonds, HK$1.5 billion owed to associate eSun and other borrowings of HK$2.45 billion.

Total debt of the flagging property company reached HK$7.14 billion at the end of July. This translates into a debt to equity ratio of 9.33.

In a bid to seek much-needed cash, Lai Sun Development had already pledged HK$1 billion worth of property projects to banks. Its entire 285.51 million-share holding in Internet arm eSun is also pledged to banks.

Investment bank Salomon Smith Barney recently identified the company as being among 10 property developers that might be privatised by their parent companies.

Lim Por-yen, chairman of parent Lai Sun Garment, painted a bleak picture for the group in the year ahead.

``Given the fast depletion of the group's development land bank, the property sales schedule of Lai Sun Development will remain thin and only two projects have tentatively been earmarked for sale in Hong Kong in 2002/2003,'' said Lim, who is Lam's father.

The two upcoming projects are the Rolling Hills residential project in Yuen Long and commercial development of Furama Court in Tsim Sha Tsui.

2. Please save historic mansion, says family
ALEX LO, SCMP 11 November 2002

The great-grandson of the man who built the historic Kom Tong Hall has appealed to the government and its owner, the Mormon Church, to preserve it.

Andrew Tse said he felt deep regret over the issue, adding it would be unfortunate if such a historic house was lost to Hong Kong.

Mr Tse is the grandson of Elizabeth Ho Pak-lin, the eldest daughter of Ho Kom Tong, who built the Mid-Levels house that was named after him. Elizabeth grew up in Kom Tong Hall and married Tse Ka-po, Mr Tse's grandfather.

"I felt a deep sense of regret when I learned of the Church's plan to destroy Kom Tong Hall. The history of the house is in a way the history of Hong Kong," Mr Tse said.

"The Mormons have spent so much money maintaining the house over the years. The interior looks more spectacular and elegant than Government House. Why would the Church want to pull it down?"

The Church, which has owned the building since 1960, has applied to tear down the Castle Road house, which is classified as a grade-II listed historical building. It has refused to disclose its redevelopment plan and has provoked protests from local residents and the Central and Western District Council.

Government heritage protection officials and Mormon representatives are locked in negotiation trying to find a compromise.

The Church has so far refused to comment.

"It is the position of the government's Antiques and Monuments Office that the house should be preserved and officials are actively negotiating with the owner towards that goal," a spokeswoman for the Leisure and Cultural Services Department said.

She refused to disclose what offers the government was ready to put on the negotiating table. But Ip Kwok-him, a Central and Western District Council member and legislator, believes the government is ready to offer a land exchange deal.

"I am optimistic about the outcome, which would probably involve a land-exchange offer," said Mr Ip, who helped organise a protest against the redevelopment plan outside the house last month.

Mr Tse said his great-grandfather spent $300,000 building the house between 1914 and 1917, a huge sum in those days.

It is believed to have been the first steel-frame house built in Hong Kong.

All the furniture and fittings were imported from Europe and the carpets were all made from Persian silk.

Its architecture was part of a wave of classical revival style emanating from England in the 19th century, according to a 1999 study by the University of Hong Kong's department of architecture.

Mr Tse also said it was untrue that Kom Tong Hall was the first house built and occupied by Chinese in Mid-Levels.

"Ho Kom Tong owned the property, 7 Castle Road, which originally had three houses, long before Kom Tong Hall was built," he said.

Ho Kom Tong died in 1950 and his family sold the house to another family surnamed Cheng in the late 1950s, who soon afterwards resold it to the Mormon Church.

The HKU study said the Church had spent, on average, more than $300,000 a year to maintain it and it had been careful not to alter any part of the house. From 1960 to 1990, the building had 109 renovations but no significant alterations had been made and the house was much the same as it was years ago, the study said.