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Eric Ng

Emperor Entertainment Group has drastically altered its business plan and use of listing proceeds only seven months after listing on the Growth Enterprise Market.

The music producer and distributor said yesterday it had revised the business plan stated in the prospectus to reflect the planned acquisition of movies and television programme producer EMG from a firm controlled by its chairman.

Such drastic changes are uncommon among listed firms.

Emperor plans to cut listing proceeds dedicated to music production and distribution to HK$12 million from HK$60 million, but it will increase those for general working capital to HK$39 million from HK$7 million.

It did not explain the reasons for the rise in allocation for working capital, except to say that it would be used 'according to activities in line with the new business objectives of the group'.

It also intends to shelve a plan to further invest HK$4 million in two dotcom firms and to open offices in Taiwan and the mainland for HK$6 million.

It had planned to increase its 50 per cent stake in eStardream, which operates a Web site aimed at attracting entertainment talent, as well as its 20 per cent stake in eFoodland, which runs a Chinese food culture site.

The change of plan was due to poor conditions in the Internet market, Emperor said.

Earlier this month, Emperor announced a plan to buy EMG Group for HK$51.6 million from Questrel, a company controlled by Emperor chairman Yeung Sau-shing. EMG has a net deficit - the amount by which total debt exceeds total assets - of HK$4.89 million. It also owes Questrel HK$56.49 million.

EMG's acquisition price was based on the loan value, offset by its net deficit.

The intention to diversify into movie production was not mentioned in the prospectus.

'Upon completion, the group will have a comprehensive multimedia entertainment platform,' the company said.

'This is vital to the development of the group.'

EMG recorded a net loss of HK$2.6 million in the year to March 31, during which Emperor saw a net profit of HK$8.7 million, compared with a loss of HK$27.63 million in the preceding year.



Emperor makes rare shift in strategy