Internet firm Asia Information Resources (Holdings) made a HK$15.41 million provision for overdue loans granted to a mainland employee and a mainland Internet service provider, its annual report revealed. It was a key contributor to last year's net loss of HK$70.78 million, when the Growth Enterprise Market-listed company recorded turnover of only HK$4.01 million. The company, which sells online trade and industry information, provides Internet solutions and invests in Internet start ups, booked a net loss of HK$48.66 million in 2000, on turnover of HK$11.49 million. In May and August that year it lent HK$13.60 million to the employee, who bought 52 per cent of a mainland company which owns an undisclosed interest in a mainland cable television company. The loans were due for settlement in May and August last year. Under the agreements, the employee agreed to transfer the 52 per cent stake in the mainland company to Asia Information in order to settle the loans. The annual report said the agreements were subject to the relaxation of the mainland's prohibition on foreign investment in the telecommunications sector. However, Asia Information did not make the transfer last year, after considering the 'financial performance' of the mainland company, and the 'uncertainty of realisability of the equity interest in the cable-TV entity'. The report did not explain why Asia Information granted the loan, but analysts speculated that it was an attempt to circumvent Beijing's ban on foreign investment in the mainland's cable TV sector. It might have hoped that China's World Trade Organisation entry would open up the sector for foreign investment. Several times last year, mainland broadcasting officials reiterated that foreign investment in the sector was prohibited and illegal investments 'cleaned up'. Yesterday, the company's management refused to respond to reporters' queries after the company's annual general meeting. Asia Information has also been unable to collect a one-year, HK$1.81 million loan to a mainland Internet service provider (ISP) made in May 2000. The ISP has the right but not the obligation to invite Asia Information to convert the loan into a 36.1 per cent stake, subject to a relaxation of Beijing's foreign investment ban in the ISP sector. No conversion happened last year, even though there has been a relaxation of foreign investment in the sector this year. Despite sharply lower revenues last year, Asia Information failed to curtail staff costs, which rose marginally to HK$23.65 million from HK$23.55 million in 2000. An additional executive director raised directors' compensation to HK$3.75 million from HK$3.5 million - although it has trimmed back slightly the payment to three directors.