(Incorporated in the Cayman Islands with limited liability) (Stock code: 395)

Transcription

1 This announcement appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities. Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. (Incorporated in the Cayman Islands with limited liability) (Stock code: 395) MAJOR TRANSACTION IN RELATION TO THE ACQUISITION OF 51% OF THE ISSUED SHARE CAPITAL OF LCE GROUP LIMITED INVOLVING ISSUE OF CONSIDERATION SHARES UNDER SPECIFIC MANDATE THE ACQUISITION The Board is pleased to announce that on 10 October 2017 (after trading hours of the Stock Exchange), the Company (as the purchaser) and the Vendor entered into the Sale and Purchase Agreement, pursuant to which, among other things, the Company conditionally agreed to acquire from the Vendor, and the Vendor has conditionally agreed to sell the Sale Shares, which shall represent 51% of the issued capital of the Target Company, at the consideration of HK$168,300,000 (subject to adjustments) which shall be satisfied as to (i) HK$25,000,000 as Earnest Money already paid under the MOU; (ii) HK$45,000,000 in cash upon Completion; and (iii) HK$98,300,000 by way of allotment and issuance of the Consideration Shares to the Vendor subject to the satisfaction of the Target Profits. Upon Completion, the Target Company will become a subsidiary of the Company and accordingly, the financial results of the Target Group will be consolidated into the accounts of the Company. IMPLICATIONS UNDER THE LISTING RULES As one of the applicable ratios (as defined in the Listing Rules) in respect of the Acquisition is more than 25% but is less than 100%, the Acquisition constitutes a major transaction for the Company under Chapter 14 of the Listing Rules, and is 1

2 subject to the reporting, announcement and Shareholders approval requirements under Chapter 14 of the Listing Rules. The Company will seek the Shareholders approval at the EGM for the grant of the specific mandate to allot and issue the Consideration Shares. GENERAL The EGM will be convened to consider and, if thought fit, approve, among other things, (i) the Sale and Purchase Agreement and the transactions contemplated thereunder; and (ii) the specific mandate for the allotment and issue of the Consideration Shares. A circular containing, among others, further details of (i) the Sale and Purchase Agreement and the transactions contemplated thereunder; (ii) the specific mandate; (iii) the financial information and other information of the Target Group; and (iv) a notice convening the EGM, will be despatched to the Shareholders on or before 31 October 2017 in accordance with the Listing Rules. The Acquisition is subject to a number of conditions precedents which may or may not be fulfilled. Shareholders and potential investors are reminded to exercise caution when dealing in the Shares. Reference is made to the announcement of the Company dated 11 June 2017 in relation to the MOU entered into between the Company and the Vendor relating to the Acquisition and the announcement of the Company dated 10 September 2017 in relation to the supplemental memorandum of understanding entered into between the Company and the Vendor to extend the long stop date of the MOU to 10 October 2017 (or such later date as may be agreed between the Company and the Vendor). THE ACQUISITION The Board is pleased to announce that on 10 October 2017 (after trading hours of the Stock Exchange), the Company (as the purchaser) and the Vendor entered into the Sale and Purchase Agreement, pursuant to which, among other things, the Company conditionally agreed to acquire from the Vendor, and the Vendor has conditionally agreed to sell the Sale Shares, which shall represent 51% of the issued capital of the Target Company, at the consideration of HK$168,300,000 (subject to adjustments) which shall be satisfied as to (i) HK$25,000,000 as Earnest Money already paid under the MOU; (ii) HK$45,000,000 in cash upon Completion; and (iii) HK$98,300,000 by way of allotment and issuance of the Consideration Shares to the Vendor subject to the satisfaction of the Target Profits. Details of the terms and conditions of the Sale and Purchase Agreement are set out below: THE SALE AND PURCHASE AGREEMENT Date: 10 October 2017 (after trading hours of the Stock Exchange) 2

3 Parties: (i) The Company as the purchaser; and (ii) Lucky Creation Enterprise Limited as the vendor. To the best of the Directors knowledge, information and belief having made all reasonable enquiries, the Vendor and its ultimate beneficial owner are Independent Third Parties. Assets to be acquired Pursuant to the Sale and Purchase Agreement, the Company has conditionally agreed to acquire and the Vendor has conditionally agreed to sell the Sale Shares. The Sale Shares, representing 51% of the entire issued share capital of the Target Company, will be sold free from all encumbrances together with all rights to any dividend or other distribution declared, made or paid after the date of the Sale and Purchase Agreement. Details of the Target Group are set out in the section headed Information of the Target Group below. Consideration Upon further negotiation between the Company and the Vendor, it is agreed that he Consideration payable by the Company to the Vendor for the Sale Shares shall be reduced from HK$281,000,000 (as indicated in the MOU) to HK$168,300,000 (subject to adjustment set out in the section below Profit Guarantee and the adjustment mechanism to the Consideration ), which shall be settled in the following manner: (i) (ii) (iii) HK$25,000,000 as Earnest Money already paid under the MOU; HK$45,000,000 in cash (by way of cheque(s)) upon Completion; and HK$98,300,000 will be satisfied by the allotment and issuance of Consideration Shares at the Issue Price of HK$0.3 per Consideration Share subject to the satisfaction of Target Profits and adjustment (if any) in the following manner; (1) Consideration Shares for the value of HK$18,431,250 (or the adjusted value of the Consideration Shares in the event that the Target Profit for the year ended 31 December 2017 is not satisfied) will be allotted and issued upon the satisfaction of the Target Profit for the year ended 31 December 2017; (2) Consideration Shares for the value of HK$34,405,000 (or the adjusted value of the Consideration Shares in the event that the Target Profit for the year ended 31 December 2018 is not satisfied) will be allotted and issued upon the satisfaction of the Target Profit for the year ended 31 December 2018; and 3

4 (3) Consideration Shares for the value of HK$45,463,750 (or the adjusted value of the Consideration Shares in the event that the Target Profit for the year ended 31 December 2019 is not satisfied) will be allotted and issued upon the satisfaction of the Target Profit for the year ended 31 December The Consideration was determined after arm s length negotiations between the Company and the Vendor on normal commercial terms taking into account of, among other things, (i) the Profit Guarantee and the adjustment mechanism to the Consideration as elaborated below (details set out in the section below Profit Guarantee and the adjustment mechanism to the Consideration ); (ii) the future business prospects of the Target Group and the industry in which the Target Group is engaging; and (iii) other reasons and benefits of the Acquisition as stated under the section headed Reasons for and benefits of the Acquisition below. The Directors are of the view that the Consideration is fair and reasonable and in the interests of the Company and the Shareholders as a whole. The Consideration Shares and the Issue Price Pursuant to the Sale and Purchase Agreement, HK$98,300,000 out of the Consideration will be satisfied by the allotment and issuance of Consideration Shares at the Issue Price of HK$0.3 per Consideration Share. The Consideration Shares represent: (i) (ii) approximately 6.88% of the entire issued share capital of the Company as at the date of this announcement; and approximately 6.44% of the entire issued share capital of the Company as enlarged by the allotment and issue of the Consideration Shares. The Issue Price of HK$0.30 per Consideration Share represents: (i) (ii) (iii) (iv) a premium of approximately % over the same price to the closing price of the Shares of HK$0.128 per Share as quoted on the Stock Exchange on the Last Trading Day; a premium of approximately % over the average closing price of the Shares of approximately HK$ per Share as quoted on the Stock Exchange for the five consecutive trading days up to and including the Last Trading Day; a premium of approximately % over the average closing price of the Shares of approximately HK$0.122 per Share as quoted on the Stock Exchange for the ten consecutive trading days up to and including the Last Trading Day; and a premium of approximately % over the net assets value per Share of approximately HK$ based on the audited consolidated net assets value 4

5 of the Company as at 31 December The Issue Price was determined after arm s length negotiations among the parties taking into account, among other things, the prevailing market performance of the Shares. The Directors consider that the Issue Price is fair and reasonable and in the interest of the Company and the Shareholders as a whole. The Consideration Shares will be allotted and issued under the specific mandate to be granted by the Shareholders at the EGM. The Consideration Shares shall rank pari passu in all respects with the Shares in issue on the date of allotment and issuance including the rights to all dividends, distributions and other payments made or to be made for which the record date falls or after the date of allotment and issue. An application will be made by the Company for the listing of, and permission to deal in, the Consideration Shares on the Stock Exchange. Adjustment to Consideration Profit Guarantee and the adjustment mechanism to the Consideration Pursuant to the Sale and Purchase Agreement, the Vendor irrevocably warrants, undertakes and guarantees to the Company that the Target Group will achieve, reach and maintain the Target Profits for the years ended 31 December 2017, 2018 and 2019 (being RMB15,000,000, RMB28,000,000 and RMB37,000,000 respectively) and in the event the Target Profits are not achieved, reached or maintained for any (or all) of the aforesaid years, the Consideration (and the Consideration Shares to be issued) shall be adjusted in the following manner: (a) No adjustments shall be made to the Consideration Shares to be issued if the Actual Profits of the Target Group for the years ended 31 December 2017, 2018 and 2019 is more than the Target Profits for those respective years; (b) In the event that the Actual Profits of the Target Group for the years ended 31 December 2017, 2018 and 2019 is less than 100% but more than 50% of the Target Profit, the value of the Consideration Shares to be issued for those respective years (and the part of Consideration to be payable for those respective years) shall be adjusted according to the below formula: Actual Profit of the respective year Target Profit of the respective year x Value of the Consideration Shares of the respective year (c) In the event that the Actual Profits of the Target Group for the years ended 31 December 2017, 2018 and 2019 is less than 50% of the Target Profit, the value of the Consideration Shares to be issued (and the part of Consideration to be payable) for those respective years shall be nil. Upon the reduction of the value of the Consideration Shares to be issued for any of those respective years as aforesaid, the Consideration to be paid shall be reduced by the same amount accordingly. The Actual Profits for the years ended 31 December 2017, 2018 and 2019 of the 5

6 Target Group will be based on the audited consolidated financial statements under IFRS prepared by the auditors of the Company. Conditions Precedent Completion of the Sale and Purchase Agreement is conditional upon the fulfilment or waiver (if applicable) of the following conditions: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) all necessary consents and approvals for the Acquisition having been obtained on the part of the Vendor and the Target Company; all necessary consents and approvals for the Acquisition having been obtained on the part of the Company; the due provision by the Vendor of all documents and/or information in relation to each of the Target Company and Subsidiaries as requested by the Company or its legal and/or financial advisors; the Company is reasonably satisfied with the results of the due diligence review; the reorganization of the Target Company has been duly completed to the satisfaction of the Company and no event has occurred or made know to the Company which has adverse effect on the value of the Target Group (after reorganization); provision of the certificate of incumbency and certificate of good standing of the Target Company and the Vendor issued not early than 14 days before the signing of the Agreement; the Warranties remaining true and accurate and not misleading in any material respect on Completion as if repeated on Completion and at all times between the date of the Sale and Purchase Agreement and Completion; no fact or circumstance having occurred that would constitute a material breach by the Vendor of the Sale and Purchase Agreement or be inconsistent in any material respect with any of the Warranties or other provisions in relation to the Vendor set out in the Sale and Purchase Agreement; employment contracts and non-compete undertakings duly executed by the Key Management Persons to the satisfaction of the Company; absence of any action or Proceeding against the Vendor, any member of the Target Group that may affect the transaction as contemplated in the Sale and Purchase Agreement or the value of investment in respect of the purchase of the Sale Shares by the Company; the full wavier of all existing shareholder loans, and the receipt of releases from the Vendor in respect of any claims by the existing shareholders against the Target Company and the Subsidiaries; 6

7 (l) (m) (n) (o) (p) (q) (r) if necessary, approval of the Sale and Purchase Agreement and the transactions contemplated herein and the performance of the Company s obligations thereunder by the Regulatory Authority and shareholders passing at a general meeting of the Company, including but not limited to, the allotment and issue of the Consideration Shares; and the compliance with all laws and regulations in Hong Kong including but not limited to the Listing Rules; if necessary, approval of the Sale and Purchase Agreement and the transactions contemplated herein and the performance of the Vendor s obligations thereunder by the Regulatory Authority and shareholders passing at a general meeting of the Vendor, the Target Company, the Subsidiaries or the Target Group (as the case may be) and the compliance with all laws and regulations in the PRC; if necessary, obtaining of all necessary and unconditional approvals, authorizations or consents in Hong Kong, the PRC, the British Virgin Islands and/or any relevant jurisdiction from banks, governmental, official authorities, Regulatory Authority or any parties as may be required under any agreement or document to which the Vendor, the Target Company and/or the any of the Subsidiaries are party(ies) and applicable laws in relation to the transactions contemplated under the Sale and Purchase Agreement and no statute, regulation or decision which would prohibit, restrict or materially delay the sale and purchase of the Sale Shares (if applicable); any consents, approvals and compliance with such other conditions in respect of the transactions as contemplated under the Sale and Purchase Agreement as may be required under the Listing Rules and/or by the Stock Exchange having been obtained; specific mandate is obtained from the shareholders of the Company for the allotment and issue of the Consideration Shares; the approval for the listing of, and permission to deal in, all the Consideration Shares on the Main Board of the Stock Exchange having been granted by the the Stock Exchange; and all necessary licences, consents, mandates, approvals, authorisations, permissions, waivers, orders, exemptions of, among others, the Stock Exchange and/or any other governmental and/or Regulatory Authorities and/or shareholders of the Company, which are required for the issuing and/or listing of the Consideration Shares having been obtained and not having been revoked. The Company may waive in writing in whole or in part all or any of the conditions listed in Paragraphs (a) to (k) (to the extent permitted under the Applicable Law). The conditions set out in Paragraphs (l) to (r) may not be waived by any Party. If any of the Conditions Precedent is not fulfilled (or waived by the Company), on or before noon on the Long Stop Date then the Sale and Purchase Agreement shall be capable of termination by either Party forthwith on written notice to the other, 7

8 provided that if the non-fulfillment of any of such Conditions Precedent is due to default of a Party such Party shall not have the right to terminate the Sale and Purchase Agreement. As at the date of this announcement, none of the above conditions precedent has been fulfilled. Completion Completion shall take place within five (5) Business Days after fulfilment or waiver (as the case may be) of the above conditions. Upon Completion, the Target Company will become a subsidiary of the Company and accordingly, the financial results of the Target Group will be consolidated into the accounts of the Company. INFORMATION ON THE VENDOR The Vendor is principally engaged in investment holding, and it is a company incorporated in the British Virgin Islands with limited liability. To the best of the Directors knowledge information and belief, having made all reasonable enquiries, the Vendor and its ultimate beneficial owner are Independent Third Parties. INFORMATION OF THE TARGET GROUP The Target Company is an investment holding company incorporated in the BVI with limited liability. It is wholly owned by the Vendor as at the date of this announcement. The PRC Subsidiary, which is indirectly wholly-owned by the Target Company through LCE HK, is a wholly foreign-owned enterprise established in the PRC. The PRC Subsidiary is principally engaged in the provision of O2O services to retail brands, with main focus in the apparel and household industry. Its services include (i) managing and operating the e-commerce platforms for its clients (the E-commerce Services ); (ii) provision of big data management and analysis services to improve its client s retail performance and (iii) provision of logistic and storage services in relation to the E-commerce Services. As at the date of this announcement, the Target Group has been serving over 50 well-known apparel brands in China. The Target Group s consolidated financial statements for year ended 31 December 2014, 2015 and 2016 were audited under PRC GAAP by its auditor. Set out below is the consolidated financial information of the Target Group: 8

9 For the year ended 31 December 2014 RMB 000 (Audited) For the year ended 31 December 2015 RMB 000 (Audited) For the year ended 31 December 2016 RMB 000 (Audited) Net Profit (before tax) 1,281 3,503 6,205 Net Profit (after tax) 1,302 3,061 4,644 Net Assets/ (Liabilities) (430) 6,631 11,274 Total Assets 2,916 8,384 14,687 Total Revenue 12,085 13,612 20,924 Set out below is the shareholding structure of the Target Group as at the date of this announcement: The Vendor 100% LCE Group Limited LCE HK 100% 100% PRC Subsidiary Set out below is the shareholding structure of the Target Group immediately after Completion: The Vendor The Company 49% 51% LCE Group Limited 100% LCE HK PRC Subsidiary 9 100%

10 REASONS FOR AND BENEFITS OF THE ACQUISITION The Company is an investment holding company engaging in a diversified business including, through its subsidiaries, in O2O solutions and Wi-Fi wireless network system operations. The Company, through its subsidiaries, has been (i) providing O2O services to various customers such as shopping malls, retail shops and exhibition centres by provision of social customer relationship management platforms, big data management and maintenance services; and (ii) operating Wi-Fi wireless network systems in shopping malls and supermarkets in the PRC. It is expected that the principal business of the Target Company and the Target Group will be absorbed by the Company with immediate synergy effect, enabling the Company to help its clients to stay competitive in the era of the internet and help its clients to create an online channel to engage with their potential customers and enhance customer experiences. Moreover, by investing in the Target Company, it is expected that the Company can diversify and strengthen its revenue sources and accelerate its growth and developments in the near future. Accordingly, the Board considers that the Acquisition, should it materialize, can enhance the value of the Shareholders and are in the interests of the Company and the Shareholders as a whole. EFFECT ON SHAREHOLDING STRUCTURE OF THE COMPANY Set out below is the shareholding structure of the Company (i) as at the date of this announcement; and (ii) immediately upon the allotment and issuance of all the Consideration Shares, for illustration purpose only: Shareholders As at the date of this announcement Immediately after the allotment and issuance of all the Consideration Shares Number of Shares Approximate % of issued Shares Number of Shares Approximate % of issued Shares Mr. Yang Xin Min (Note 1) 592,573, ,573, Mr. Yang Zhen (Note 2) 1,336, ,336, Mr. Kwan Che Hang Jason (Note 3) 131,413, ,413, HK DYF Int l Holding Group Limited 260,536, ,536, Other public Shareholders 3,776,174, ,776,174, Vendor (Note 4) ,666, Total 4,762,033, ,089,700, Notes : 1. Mr. Yang Xin Min is an executive Director and the chairman of the Board of the Company. 2. Mr. Yang Zhen is the son of Mr. Yang Xin Min and is deemed to be a concerted party. He is also an executive 10

11 Director of the Company. 3. The 131,413,304 shares comprised (i) 792,000 shares held by Mr. Kwan Che Hang Jason directly; and (ii) 130,621,304 shares held by China Software Services (Holdings) Limited ( CSS ). Mr. Kwan Che Hang Jason was the controlling shareholder of CSS and therefore was deemed to have an interest in the 130,621,304 shares. 4. Assuming all the Consideration Shares will be allotted and issued without adjustment. IMPLICATIONS UNDER THE LISTING RULES As one of the applicable ratios (as defined in the Listing Rules) in respect of the Acquisition is more than 25% but is less than 100%, the Acquisition constitutes a major transaction for the Company under Chapter 14 of the Listing Rules, and is subject to the reporting, announcement and Shareholders approval requirements under Chapter 14 of the Listing Rules. The Company will seek the Shareholders approval at the EGM for the grant of the specific mandate to allot and issue the Consideration Shares. GENERAL The EGM will be convened to consider and, if thought fit, approve, among other things, (i) (ii) the Sale and Purchase Agreement and the transactions contemplated thereunder, and the specific mandate for the allotment and issue of the Consideration Shares. A circular containing, among others, further details of (i) the Sale and Purchase Agreement and the transactions contemplated thereunder; (ii) the specific mandate; (iii) the financial information and other information of the Target Group; and (iv) a notice convening the EGM, will be despatched to the Shareholders on or before 31 October 2017 in accordance with the Listing Rules. WARNING The Acquisition is subject to a number of conditions precedents which may or may not be fulfilled. Shareholders and potential investors are reminded to exercise caution when dealing in the Shares. DEFINITIONS In this announcement, unless the context otherwise requires, the following terms shall have the following meanings: Acquisition The acquisition of the Sale Shares by the Company from the Vendor pursuant to the terms and conditions 11

12 under the Sale and Purchase Agreement Actual Profits Board Company Completion Consideration Consideration Shares Director(s) Earnest Money EGM Hong Kong HK$ IFRS Independent Third Party(ies) Issue Price Last Trading Date LCE HK Audited consolidated Net Profits under IFRS The board of Directors of the Company Smartac Group China Holdings Limited, a company incorporated in the Cayman Islands with limited liability and the issued Shares of which are listed on the main board of the Stock Exchange (Stock Code : 395) Completion of the Acquisition pursuant to the Sale and Purchase Agreement HK$168,300,000 (subject to adjustments), being the consideration payable by the Company to the Vendor for the Sale Shares 327,666,666 new Shares to be issued by the Company to settle part of the Consideration The director(s) of the Company The amount of HK$25,000,000 paid by the Company to the Vendor under the MOU The extraordinary general meeting of the Company to be convened for the purpose of, among other things, seeking approval from the Shareholders in respect of (i) the Sale and Purchase Agreement and the transactions contemplated thereunder, and (ii) the specific mandate for the allotment and issue of the Consideration Shares The Hong Kong Special Administrative Region of the People s Republic of China Hong Kong dollar, the lawful currency of Hong Kong International Financial Reporting Standards Independent third parties who are not connected person(s) of the Company and are independent of and not connected with the Company or Directors, chief executive, or Substantial Shareholders of the Company or any of its subsidiaries or their respective associates HK$0.30 per Consideration Share 10 October 2017, being the last trading day of the Shares before the signing of the Sale and Purchase Agreement LCE HK Limited, a company incorporated in Hong Kong with limited liability 12

13 Listing Rules Long Stop Date MOU Net Profits O2O Parties PRC PRC GAAP Regulated Authority PRC Subsidiary RMB Sale Shares Sale and Purchase Agreement Shareholders Share(s) Stock Exchange Target Company The Rules Governing the Listing of Securities on the Stock Exchange 31 December 2017 or such later date as the Parties may agree in writing The Memorandum of Understanding in relation to the Acquisition entered into between the Company and the Vendor dated 10 June 2017 The net profits after tax, minority interest and any extraordinary or exceptional items of a Target Group Company Online to offline Parties to the Sale and Purchase Agreement The People s Republic of China excluding Hong Kong, Macau Special Administration Region and Taiwan for the purpose of this announcement Generally accepted accounting principles of PRC Any governmental or regulatory commission, board, body, authority or agency, or any stock exchange (including but not limited to the Stock Exchange), self-regulatory organization or other non-governmental regulatory authority, or any court, tribunal or arbitrator, in each case whether national, central, federal, provincial, state, regional, municipal, local, domestic or foreign 上海朔泓資訊技術有限公司, a wholly foreign-owned enterprise established in the PRC and a wholly-owned subsidiary of LCE HK Renminbi, the lawful currency of the PRC 5,100 shares in the issued share capital of the Target Company which the Vendor agreed to sell and the Company agreed to acquire conditionally under the Sale and Purchase Agreement The conditional sale and purchase agreement dated 10 October 2017 entered into between the Company and the Vendor in relation to the Sale Shares Shareholders of the Company Ordinary share(s) of HK$0.05 each in the share capital of the Company The Stock Exchange of Hong Kong Limited LCE Group Limited, a company incorporated under the 13

14 laws of the British Virgin Islands, which is wholly-owned by the Vendor Target Group Target Profits The Target Company and its subsidiaries The target profits for the years ended 31 December 2017, 2018 and 2019, being RMB15,000,000, RMB28,000,000 and RMB37,000,000 respectively Vendor Lucky Creation Enterprise Limited, a company incorporated under the laws of the British Virgin Islands % Per cent Hong Kong, 11 October 2017 By Order of the Board Smartac Group China Holdings Limited Yang Xin Min Chairman As at the date of this announcement, the Directors are Mr. Yang Xin Min, Mr. Yang Zhen and Mr. Kwan Che Hang Jason as executive Directors, and Dr. Cheng Faat Ting Gary, Mr. Poon Lai Yin Michael and Mr. Yang Wei Qing as independent non-executive Directors. Unless otherwise stated, the exchange rate between RMB and HK$ used in this announcement is HK$1=RMB Such exchange rate should not be taken as that the relevant amount has been, ought to be or can be exchanged at such exchange rate. 14