TUNG LOK RESTAURANTS (2000) LTD (Co. Reg. No N) (Incorporated in the Republic of Singapore)

Transcription

1 TUNG LOK RESTAURANTS (2000) LTD (Co. Reg. No N) (Incorporated in the Republic of Singapore) Proposed of Entire Equity Interests in Associated Company 1. INTRODUCTION The Board of Directors of Tung Lok Restaurants (2000) Ltd (the Company ) wishes to announce that the Company s wholly-owned subsidiary Tung Lok (China) Holdings Pte Ltd ( TLC ) had on 28 March 2006 entered into a share transfer agreement with each of Shenzhen Hua Nan Xiang-E Qing Investment & Development Co. Ltd ( Shenzhen Hua Nan ) and Ms. Huang Jing (together the Purchasers ) for the sale of all the shares owned by TLC in Xiang-E Qing-My Humble House in Chengdu (Restaurant) Company Ltd ( MHH Chengdu ) ( constituting 30% of the registered capital of MHH Chengdu (collectively the "Sale Shares") (the Proposed ). Pursuant to the share transfer agreement between TLC and Shenzhen Hua Nan ( Shenzhen Hua Nan SPA ), Shenzhen Hua Nan had agreed to acquire from TLC shares held by TLC in MHH Chengdu (constituting 20% of the registered capital of MHH Chengdu) for a consideration of RMB 2,400,000. Shenzhen Hua Nan is also a current shareholder of MHH Chengdu. Pursuant to the share transfer agreement between TLC and Ms. Huang Jing ( Huang Jing SPA ), Ms. Huang Jing had agreed to acquire from TLC shares held by TLC in MHH Chengdu (constituting 10% of the registered capital of MHH Chengdu) for a consideration of RMB 1,200,000. MHH Chengdu is a PRC incorporated joint venture company and its principal activity is that of restauranteur. It runs the restaurant by name "Xiang-E Qing Hanshe" ( 湘鄂情寒舍 ), serving mainly Hunan and Hubei Cuisine. 2. Relative Figures under Chapter 10 of the Listing Manual The Proposed is governed by the rules in Chapter 10 of the Listing Manual. Based on the latest unaudited consolidated financial statements of the Company for the half-year ended 30 September 2005 ("1H FY 2006"), the relative figures computed on the bases set out in Rule 1006 of the Listing Manual are as follows: NAV test under rule the unaudited NAV (defined in accordance with Rule 1002(3) of the Listing Manual as total assets minus total liabilities) of the Sale Shares as at 30 September 2005 is 377,000 (based on the average exchange rate of RMB 100= as used for the 1H FY 2006 unaudited consolidated financial statements of the Company). This represents approximately 6% of the Group s NAV of million as at 30 September Net profit test under rule 1006 the unaudited net profits (defined in accordance with Rule 1002(3) of the Listing Manual as profit or loss before income tax, minority interests and extraordinary items) attributable to the Sale Shares for the 6 months ended 30 September 2005 is 209,000 (as reflected in the 1H FY 2006 unaudited consolidated income statement). This represents 1

2 approximately 62% of the Group s unaudited net profit of 337,000 for the 1H FY (c) (d) Market capitalization test under rule 1006(c) the consideration of RMB 3,600,000 (equivalent to 725,472 represents approximately 4.94 % of the market capitalization of million as at 27 March Securities issue test under rule 1006(d) not applicable since the Consideration is in cash. 3. KEY TERMS OF THE PROPOSED ACQUISITION The terms and conditions of the Proposed and the respective purchase consideration of the Sale Shares have been arrived at after arm s length negotiations between TLC and each of the Purchaser and agreed upon on a willing-buyer and willing-seller basis. The other key terms and conditions of the Proposed are set out below. Based on the relative figures (as computed under paragraph 2 above) for the purposes of Chapter 10 of the listing manual of the Singapore Exchange Securities Trading Limited ( SGX- ST ), the Proposed is considered to be a major transaction for the purposes of the provisions of Rule 1013 of the and is therefore subject to, inter alia, the approval of the Shareholders of the Company at an extraordinary general meeting ( EGM ) to be convened. The Proposed is also subject to, inter alia, the approval of the relevant authority as applicable. Each of the Purchaser shall bear all taxes and administrative costs of remittances in relation to the shares sold to them by TLC. If TLC had paid any such taxes or costs, the Purchasers shall reimburse the same to TLC. Each of the Purchaser have agreed that, upon the transfer of the respective proportion of the Sale Shares by TLC in MHH Chengdu to the Purchasers, the Purchasers will rename MHH Chengdu so that they will no longer bear the Chinese or English equivalent of the words " 寒舍 " (which is the Chinese equivalent of "My Humble House") or contain the same name as TLC or similar characters with TLC's name. 4. ADVANCE PAYMENTS The Purchasers have already paid an amount totalling RMB 1,800,000 equaling 363,289 to TLC and TLC has, by a letter to each of the Purchaser dated 28 March 2006 (each the "Letter" and collectively the "Letters"), clarified to the effect that: the money paid as stated in paragraph 3.1 above and any other monies to be paid to TLC by the Purchasers will be considered as interest free advances to TLC for the initial three month period from the date of receipt of monies by TLC. After the three month period, interest shall be payable by TLC to the Purchasers at the then prevailing interest rate of the People's Bank of China ( 中国人民银行 ) until the registration of the share transfers in the PRC or the repayment of the advance by TLC, as the case may be; in the event that the Company does not obtain shareholders approval at the EGM to approve the Proposed, all monies advanced and to be advanced by the Purchasers to TLC will be refunded promptly to the Purchasers with or without interest, in accordance with paragraph 3(i) above; and 2

3 (c) in the event that the Company obtains shareholders approval for the Proposed, then all monies advanced or to be advanced by the Purchasers will be treated as settlement of the Consideration due to TLC and each of the Purchasers will be required to pay to TLC only the relevant portion of the outstanding Consideration. 5. RATIONALE FOR THE DISPOSAL The Board believes that it is in the best interests of the Company and its subsidiaries ( Group ) to undertake the Proposed since the Group is not actively involved in the operating and financial policies of MHH Chengdu to ensure continued profitable running of the business and therefore wish to utilize the opportunity presented to the Group to realise its investment in MHH Chengdu at a value it believes to be attractive. 6. FINANCIAL EFFECTS OF THE PROPOSED DISPOSAL AND THE USE OF PROCEEDS NTA of MHH Chengdu The NTA of MHH Chengdu as in the books of MHH Chengdu as at 31 March 2005 was RMB 2,738,885 (equivalent to 551,139) and the NTA attributable to the Sale Shares as at 31 March 2005, being 30% of the NTA of MHH Chengdu is RMB 821,665 (equivalent to 165,342) (the conversion of RMB to for the purpose of the NTA is based on the exchange rate as used for the audited accounts of the Company for the year ended 31 March 2005). Net proceeds of the Sale Shares The book value of the Sale Shares in the Company's books as at 31 March 2005 was 301,022. Therefore, the excess of the proceeds of the sale over the book value based on the Consideration of RMB 3,600,000 (equivalent to 725,472) is 424,450 (before providing for other adjustments / expenses, if any, from the sale proceeds). Intended use of the Net proceeds The Directors propose to utilize the net proceeds for the working capital requirements of the Group. A summary of the proforma financial effects is set out below for illustration purposes only, and does not reflect the actual future financial situation of the Group after the Proposed. Financial Effects of the Proposed Effect on NTA per Share Based on the audited consolidated results of the Group for the financial year ended 31 March 2005, and assuming that the Proposed had been completed as at 31 March 2005, the financial effect of the Proposed on the consolidated NTA per Share, on a proforma basis is as follows: 3

4 Before Proposed After Proposed NTA 6,190,000 6,614,000 1 NTA per Share (cents) The NTA per Share is calculated based on the number of Shares in issue of 140,000,000 as at 31 March Effect on Earnings per Share Assuming that the Proposed had been completed on 1 April 2004, based on the audited consolidated results of the Group for the financial year ended 31 March 2005, the EPS for the financial year ended 31 March 2005 would have been cents as compared to (0.3074) cents as further illustrated below: (Loss) Net profit after tax attributable to Shareholders Before Proposed After (414,000) 10,000 2 Basic EPS (cents) (0.3074) Proposed The EPS for the financial year ended 31 March 2005 is calculated by dividing the net profit after tax attributable to the Shareholders by the weighted average number of Shares in issue of 134,666,667 in CONTROLLING SHAREHOLDERS' AND DIRECTORS' INTERESTS None of the Director has, and as far as the Directors are aware none of the controlling Shareholders of the Company have, any interest, direct or indirect, in the Proposed. 1 The calculation of the NTA after the Proposed for the purpose of computing the effect on NTA per share is based on figures computed before any adjustments / expenses on the Proposed, if any. 2 The calculation of the net profit after tax after the Proposed for the purpose of computing earnings per share is based on figures computed before any adjustments / expenses on the Proposed, if any. 4

5 8. INSPECTION OF DOCUMENTS Copies of the Shenzhen Hua Nan SPA, the Huang Jing SPA and the Letters are available for inspection by the shareholders of the Company at the registered office of the Company at 1 Sophia Road #05-03, Peace Centre, Singapore during normal business hours for a period of three months from 29 March CIRCULAR TO SHAREHOLDERS The circular to Shareholders containing, inter alia, the notice of the extraordinary general meting and the terms and conditions of the Proposed will be dispatched to the Shareholders in due course. BY ORDER OF THE BOARD Andrew Tjioe Ka Men Managing Director 28 March