ICG Asia has reported a HK$1.03 billion net loss last year after a HK$1.01 billion provision for the pending sale of its toy and property businesses to its former chairman and a Hutchison Whampoa subsidiary. The company yesterday said the sale would be for much less than the businesses' net asset values. In 1999 ICG made a profit of HK$55.08 million. Chief financial officer Rowena Chu said the provision was made to reflect the market value of the operations that it planned to sell to former chairman Luk Chung-lam and a subsidiary of conglomerate Hutchison for HK$225 million. This represents a discount of 85.6 per cent to the HK$1.57 billion net value of the assets. ICG Asia inherited the toy and property assets from Harbour Ring International via a backdoor-listing deal in March last year, under which American Internet start-up investor Internet Capital Group, Hutchison and its chairman Li Ka-shing acquired stakes of 54.9 per cent, 15 per cent and 5 per cent, respectively. The investors aimed to turn ICG Asia into a regional business-to-business e-commerce start-ups investor. As part of the deal approved by shareholders, ICG Asia obtained a right - via an option agreement - to sell its toy and property operations to Hutchison and Mr Luk at HK$225 million any time before May 3, 2002. The deal would allow Mr Luk to part-privatise one of the largest listed toy manufacturers in Hong Kong. Ms Chu defended ICG Asia's agreement to sell its core revenue-making assets at a sharp discount to their book value. '[Harbour Ring] was trading at an average of less than 30 HK cents in the 18 months previous to the [back-door listing] deal, [and] based on that, the company was worth about HK$225 million,' she said. About one month after the deal was completed, Mr Luk raised HK$132 million by placing 110 million of his shares at HK$1.2 each. The counter fell 12.9 per cent yesterday to close at 24.8 HK cents. All but HK$79,000 of ICG Asia's turnover last year of HK$330.64 million came from its toy and property operations, with the remainder from e-commerce activities. Of the HK$30.44 million operational loss, HK$18.98 million was from toy and property operations, and HK$16.74 million was from e-commerce operations. Of the HK$16.74 million loss, HK$7.85 million was ICG Asia's share of losses posted by its associate companies. The toy and property operations were excluded from ICG Asia's profit-and-loss account as of May 4 last year, due to their impending sale. ICG Asia said the accounting treatment was made because 'the company has determined to hold the [toy and property operations] for disposal', as well as 'substantial long-term restrictions' on its control over the operations. The restrictions arose from an agreement between the company and its former major shareholders, under which ICG Asia would manage the operations but not have control over them ahead of their impending sale. The company holds an 80 per cent stake in Breakaway Solutions Asia Pacific, a joint venture with United States-based Breakaway Solutions, which provides consulting and technology services on 'enterprise relationship management'. It has also invested US$10 million in online consumer products sourcing agency MegaVillage.com Holdings, and holds a stake in Freeborders.com, which provides supply-chain solutions to apparel manufacturers.