Annual Report 2010 年報 Leading New Entertainment 帶領娛樂 (Stock code 股份代號: 571) AAftersrshhockk 唐唐山大大地震 Film Awards BestBest FeatureF Film 最佳電影 電影獎項 2010 AsiaAs Pacific Screen Awards 第四屆亞太電影大獎第四屆亞 BestBest ActorA 最佳男主角 - Chen Daoming陳道明 2010 AsiaAs Pacific Screen Awards 第四屆亞太電影大獎第四屆亞 FFire of CCoonssccienncce FilmFilm ofo the Year 年度影片 火火龍龍 2011 ChinaCh Film Director’s Guild Best Actor最佳男主角 - Richie Jen任賢齊 20112011年度中國電影導演協會年 2010 Puchon International Fantastic Film Festival BestBest ActressA 導演眼中的年度女演員- Xu Fan徐帆 2010 年度富川國際奇幻電影節 2011 ChinaCh Film Director’s Guild 20112011年度中國電影導演協會年 20102010 Top-GrossingT Film 2010年最高票房亞洲電影大獎 5th AsianAsia Film Awards TThe FFounddingg of a Repuubblic 建建國大業 第五屆亞洲電影大獎第五屆亞 BestBest ActressA 最佳女主角- Xu Fan徐帆 Best Feature Film 最佳故事片獎 5th AsianAsia Film Awards 30th China Hundred Flowers People Choice Awards 第五屆亞洲電影大獎第五屆亞 (aka: Chinese Biennal Awards) 第三十屆大眾電影百花獎 Best VisualV Effects 最佳視覺效果- Best Supporting Actress 最佳女配角 - Xu Qing 許晴 Phil JoJones and Zhang Yanming 蔣燕鳴 30th China Hundred Flowers People Choice Awards 5th AsianAsia Film Awards (aka: Chinese Biennal Awards) 第五屆亞洲電影大獎第五屆亞 第三十屆大眾電影百花獎 Contents 2 Corporate Information 3 Corporate Profile 4 Chairman’s Statement 16 Financial Summary 18 Property Portfolio of Lai Fung 2200 Corporate Governance Report 2288 Biographical Details of Directors 3355 Report of the Directors 4488 Shareholders’ Information 4499 Financial Section 164 Notice of Annual General Meeting eSun Holdings Limited 2 Annual Report 2010 Place of Incorporation Authorised Representatives Corporate Bermuda Lui Siu Tsuen, Richard Information Kwok Siu Man Directors Executive Directors Share Registrars and Lam Kin Ngok, Peter Transfer Office in Lui Siu Tsuen, Richard Hong Kong (Chief Executive Officer) Tricor Tengis Limited Cheung Wing Sum, Ambrose 26th Floor, Tesbury Centre Cheung Sum, Sam 28 Queen’s Road East Non-executive Directors Wanchai, Hong Kong Low Chee Keong (Chairman) Share Registrars and U Po Chu Transfer Office in Bermuda Lo Kwok Kwei, David Butterfield Fulcrum Group (Bermuda) Albert Thomas da Rosa, Junior Limited Leung Churk Yin, Jeanny Rosebank Centre Independent Non-executive 11 Bermudiana Road Directors Pembroke HM08 Tong Ka Wing, Carl (Deputy Chairman) Bermuda Alfred Donald Yap Independent Auditors Ng Lai Man, Carmen Ernst & Young Audit Committee Certified Public Accountants Ng Lai Man, Carmen (Chairwoman) Solicitors Tong Ka Wing, Carl As to Hong Kong Law: Alfred Donald Yap Baker & Mckenzie Low Chee Keong Reed Smith Richards Butler Remuneration Committee Vincent T. K. Cheung, Yap & Co. Tong Ka Wing, Carl (Chairman) As to Bermuda Law: Ng Lai Man, Carmen Conyers Dill & Pearman Alfred Donald Yap Low Chee Keong Principal Bankers Lui Siu Tsuen, Richard DBS Bank (Hong Kong) Limited Hang Seng Bank Limited Company Secretary The Hongkong and Shanghai Banking Kwok Siu Man Corporation Limited Registered Office Listing Clarendon House The issued shares of the Company are 2 Church Street listed and traded on the Main Board Hamilton HM 11 of The Stock Exchange of Hong Kong Bermuda Limited Principal Office Stock Code/Board Lot 11th Floor 571/2,000 Lai Sun Commercial Centre 680 Cheung Sha Wan Road Website Kowloon, Hong Kong www.esun.com eSun Holdings Limited Annual Report 2010 3 eSun Holdings Limited (the “Company”) is a member of the Lai Sun Group which has been established in Hong Kong since 1947. The principal activities of the eSun Group Corporate include the development and operation of, and investment in, media and entertainment, Profile production and distribution of music and film and video format products, and the provision of advertising agency services. The Company also owns a 40% effective interest in the Macao Studio City (“MSC”) project. The project will be developed on a site strategically located “Where Cotai BeginsTM”, the Macau Special Administrative Region of The People’s Republic of China, next to the Lotus Bridge immigration checkpoint, linking the complex directly to Zhuhai’s Hengqin Island. Lai Sun Garment (International) Limited* 47.97% Lai Sun Development Company Limited* 36.08% The Company* 40.58% Lai Fung Holdings Limited* Macao Media & Others Property Studio City Entertainment Artiste Property Movie Television Music Event Management Management Investment and Drama Development (Mainland of China) Media Asia 豐麗星恆 East Asia Music East Asia Rich & Famous Entertainment (Holdings) Entertainment Talent 文化顧問(北京) Management Group Limited 有限公司 Limited Limited Group Limited Capital Mountain 東亞豐麗 Artists Entertainment 演出經紀(北京) Limited Limited 有限公司 East Asia Music Revolution Publishing Talent Management Limited Limited East Asia Record Production Company Limited Clot Media Division Limited * Listed on the Main Board of The Stock Exchange of Hong Kong Limited eSun Holdings Limited 4 Annual Report 2010 REORGANISATION Chairman’s On 30 September 2010, the Company and Lai Sun Garment (International) Limited Statement (“LSG”) completed a reorganisation (“Reorganisation”). Pursuant to the Reorganisation, the Company transferred its entire shareholding interest in Lai Sun Development Company Limited (“LSD”) (approximately 36.72% of the issued share capital of LSD) to LSG in exchange for LSG’s entire shareholding interest in Lai Fung Holdings Limited (“Lai Fung”) (approximately 40.58% of the issued share capital of Lai Fung). In order to account for the difference between the agreed value of the LSD shares and the Lai Fung shares being swapped, the Company further agreed to pay to LSG an additional cash of approximately HK$178.4 million, out of which HK$100 million was paid upon completion of the Reorganisation and the remaining approximately HK$78.4 million to be paid, without interest, six months after the completion of the Reorganisation. eSun Holdings Limited Annual Report 2010 5 LOW Chee Keong Chairman Immediately following the completion of the Reorganisation, the group structure involving LSG, LSD, the Company and Lai Fung has become as follows: CChhaaiirmaann’ss SSttaattemeennt LSG 47.97% LSD 36.08% Company 40.58% Lai Fung eSun Holdings Limited 6 Annual Report 2010 As a result of the Reorganisation, the cross-shareholding structure between the Company CChhaairmmaann’ss SSttaatteemmeennt and LSD that existed since 2004 was dismantled. The Reorganisation simplified the ownership structure of the Company and LSD, and eliminated the circular effect of the accounting treatment of the cross-holding. By dismantling this structure, the magnifying effect of the cross-held shareholding interests has been eliminated upon completion of the Reorganisation. More importantly, the directors of the Company (“Directors”) believe that the simplified shareholding structure provides greater clarity to shareholders and the market with regard to the core business of each of the companies. The Company has become the controlling shareholder of Lai Fung, which has a well- established portfolio of property interests in the Mainland of China. The Company thus shares the results of Lai Fung as an associate (as that expression is used in the context of the Hong Kong Financial Reporting Standards) of the Company. OVERVIEW OF ANNUAL RESULTS For the year ended 31 December 2010, the Group recorded a turnover of HK$459,020,000 (2009: HK$359,455,000), representing an increase of approximately 27.7% from the previous year. For the year 2010, except for film production and distribution, there were increases in revenue across most of our media and entertainment business operations, namely entertainment event income, music production and distribution and film library licensing income. The increase in entertainment event income over the previous year was mainly due to the Group organising larger scale concerts in the year as compared to the smaller events in the previous year. The increase in revenue for music production and distribution was due to higher album sales in 2010. The decrease in revenue for film production and distribution was largely due to the comparatively lower revenue from the films released in 2010. For the year ended 31 December 2010, the Group recorded a loss from operating activities of HK$269,069,000 (2009: a loss of HK$422,013,000). During the year, the increase in revenue of certain business operations was accompanied by corresponding increases in related cost/expenditure. The Group recognised a fair value loss on a put option of HK$25,356,000 (2009: HK$118,328,000) in 2010. Further details of the put option are set out in below Business Review under the heading of “EAST (Holdings)’s put option”. For the year ended 31 December 2010, the Group recorded a share of profits of associates of HK$541,685,000 (2009: HK$521,276,000). Prior to the Reorganisation, the Group held approximately 36.72% shareholding interest in LSD, which in turn held approximately 36.08% shareholding interest in the Group. Following the Reorganisation, the Group holds approximately 40.58% shareholding interest in Lai Fung while the Group ceased to hold any shareholding interest in LSD. Following the completion of the Reorganisation on 30 September 2010, LSD ceased to be an associate of the Company and Lai Fung has become an associate of the Company. Accordingly, the share of profits of associates during the year was mainly attributable to (i) LSD for the period up to 30 September 2010; and (ii) Lai Fung for the period since 1 October 2010. For the year under review, LSD and Lai Fung contributed HK$402,681,000 (including cross-shareholding effects) and HK$139,660,000 to the Group’s share of profits of associates, respectively. eSun Holdings Limited Annual Report 2010 7 For the year, the Group’s share of the losses of jointly-controlled entities was CChhairrmmaann’ss HK$31,353,000, as compared to a reported loss of HK$43,313,000 for the previous SSttaatteemment year. The decrease in share of losses of jointly-controlled entities was attributable to the decrease in losses of the MSC project. Finance costs during the year increased to HK$7,226,000 (2009: HK$6,758,000). Further, as a result of the completion of the Reorganisation, the Group booked a one- off gain of HK$610,007,000. The Group recorded a profit for the year (before non- controlling interests) of HK$842,777,000 (2009: HK$49,038,000).