DIGITAL DOMAIN HOLDINGS LIMITED (Incorporated in Bermuda with limited liability) (Stock Code: 547)

Transcription

1 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 Bermuda with limited liability) (Stock Code: 547) FURTHER INFORMATION ON DISCLOSEABLE TRANSACTION Reference is made to the announcement (the Announcement ) of Digital Domain Holdings Limited (the Company ) dated 20 October 2014 in relation to the formation of the Joint Venture Company between DDM (an indirect wholly-owned subsidiary of the Company) and TNT. Unless otherwise stated, capitalised terms used herein shall have the same meanings as those defined in the Announcement. COMPLIANCE WITH RULES 14.60A AND OF THE LISTING RULES As disclosed in the Announcement, the capital contribution to the Joint Venture Company by TNT is to be made by way of granting a licence over the IP Rights to the Joint Venture Company, the value of which is determined by an independent valuer jointly appointed by DDM and TNT, and is expected to be evaluated based on discounted cash flows. A valuation has been conducted by Knight Frank Asset Appraisal Limited, an independent professional valuer, who has issued a valuation report (the Valuation Report ) on 29 January 2015 which stated that the fair value of the IP Rights was reasonably represented in the amount of HK$22,000,000. The valuation of the IP Rights as at 20 October 2014 was prepared based on income approach. As such, the valuation constitutes a profit forecast under Rule of the Listing Rules (the Profit Forecast ). Pursuant to Rule 14.62(1) of the Listing Rules, the following are the details of the principal assumptions, including commercial assumptions, upon which the Valuation Report was issued: 1. The Joint Venture Company will be established and successfully granted the IP Rights license by TNT; 2. The financial projection relating to the IP Rights license as provided by the management of the Company is achievable; 3. There will be no major changes in existing political, legal, fiscal or economic conditions in the country or district where the business is in operation; 1

2 4. The Joint Venture Company will retain the key management and personnel to maintain its business operations; 5. There will be no major business disruptions through international crisis, diseases, industrial disputes, industrial accidents or severe weather conditions that will affect the business; 6. The Joint Venture Company will remain free from claims and litigation against the business or its customers that will have a material impact on value; and 7. The Joint Venture Company is not subject to any unusual or onerous restrictions or encumbrances. BDO Limited (the Reporting Accountants ), the reporting accountants of the Company, has reviewed the arithmetical accuracy of calculation of the discounted future estimated cash flows, which do not involve any review, consideration or conduction of any work on the adoption of accounting policies, and the reasonableness and the validity of the bases and assumptions for the Valuation Report. The Board has reviewed the principal assumptions upon which the discounted future estimated cash flows is based and is of the view that the Profit Forecast has been made after due and careful enquiry. Letters from the Reporting Accountants and the Board are included in the appendices I and II pursuant to Rules 14.60A and of the Listing Rules. The following are the qualifications of the experts who have given their opinion and advice included in this announcement. Name Knight Frank Asset Appraisal Limited BDO Limited Qualification Independent professional valuer Certified Public Accountants As at the date of this announcement, each of Knight Frank Asset Appraisal Limited and the Reporting Accountants does not have any shareholding, directly or indirectly, in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate person to subscribe for securities in any member of the Group. Each of Knight Frank Asset Appraisal Limited and the Reporting Accountants has given and has not withdrawn its consent to the publication of this announcement with inclusion of its report and all reference to its name in the form and context in which it appears. Hong Kong, 29 January 2015 By Order of the Board Seah Ang Chairman and Chief Executive Officer As at the date of this announcement, Mr. Seah Ang and Mr. Fan Lei are the executive Directors and Ms. Lau Cheong, Mr. Duan Xiongfei and Mr. Wong Ka Kong Adam are the independent non-executive Directors. 2

3 APPENDIX I LETTER FROM THE REPORTING ACCOUNTANTS The following is the text of a letter from the Reporting Accountants prepared for the purpose of incorporation in this announcement. The Directors Digital Domain Holdings Limited Rooms , 18/F Sun Hung Kai Centre 30 Harbour Road Wanchai, Hong Kong 29 January 2015 Dear Sirs (THE COMPANY ) AND ITS SUBSIDIARIES (COLLECTIVELY REFERRED TO AS THE GROUP ) DISCOUNTED FUTURE ESTIMATED CASH FLOWS IN CONNECTION WITH THE VALUATION ON THE LICENSE FOR INTELLECTUAL PROPERTY RIGHTS RELATING TO MISS TERESA TENG (THE IP RIGHTS ) Independent assurance report In accordance with our agreed terms of engagement, we have examined the arithmetical accuracy of the calculations of the discounted future estimated cash flows (the Underlying Forecast ) on which the valuation (the Valuation ) dated 29 January 2015 prepared by Knight Frank Asset Appraisal Limited in respect of the license for the IP Rights (including the right of name and portrait, trademark and other intellectual property rights) as at 20 October 2014 is based. The Valuation based on the Underlying Forecast is regarded as a profit forecast under Rule of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the Listing Rules ). Directors Responsibility for the Underlying Forecast The directors of the Company (the Directors ) are responsible for the preparation of the Underlying Forecast in accordance with the bases and assumptions approved by the Directors, a summary of which is set out on pages 1 and 2 of the announcement of the Company dated 29 January 2015 (the Announcement ) in connection with the formation of a joint venture company by the Group. This responsibility includes carrying out appropriate procedures relevant to the preparation of the Underlying Forecast for the Valuation and applying an appropriate basis of preparation; and making estimates that are reasonable in the circumstances. 3

4 Reporting Accountants Responsibility It is our responsibility to form a conclusion, based on our work on the arithmetical accuracy of the calculations of the Underlying Forecast on which the Valuation is based, and to report our conclusion to you solely for the purpose of reporting under Rule 14.62(2) of the Listing Rules and for no other purpose. We accept no responsibility to any other person in respect of, arising out of, or in connection with our work. Because the Underlying Forecast relates to cash flows, no accounting policies of the Company have been adopted in its presentation. The bases and assumptions adopted by the Directors as set out on pages 1 and 2 of the Announcement include hypothetical assumptions about future events and management actions that cannot be confirmed or verified in the same way as past results, and these bases and assumptions may or may not occur. Even if the events and actions anticipated do occur, actual results are still likely to be different from the Underlying Forecast and the variation may be material. Accordingly, we have not reviewed, considered or conducted any work on the reasonableness and the validity of the bases and assumptions and do not express opinion whatsoever thereon; and our work does not constitute any valuation on the license for the IP Rights. Basis of Conclusion We conducted our work in accordance with the Hong Kong Standard on Assurance Engagements 3000 Assurance Engagements Other Than Audits or Reviews of Historical Financial Information issued by the Hong Kong Institute of Certified Public Accountants. We have examined the arithmetical accuracy of the calculations of the Underlying Forecast. Our work has been undertaken solely to assist the Directors in evaluating whether the Underlying Forecast, so far as the arithmetical accuracy of the calculations is concerned, has been properly compiled in accordance with the bases and assumptions approved by the Directors, a summary of which is set out on pages 1 and 2 of the Announcement. Conclusion In our opinion, the Underlying Forecast, so far as the arithmetical accuracy of the calculations is concerned, has been properly compiled in all material respects in accordance with the bases and assumptions approved by the Directors as set out on pages 1 and 2 of the Announcement. Yours faithfully BDO Limited Certified Public Accountants Hong Kong 4

5 APPENDIX II LETTER FROM THE BOARD The following is the text of a letter from the Board of the Company prepared for the purpose of incorporation in this announcement. 29 January 2015 Listing Division The Stock Exchange of Hong Kong Limited 11/F, One International Finance Centre, 1 Harbour View Street, Central, Hong Kong Dear Sirs, Re: Discloseable Transaction Formation of a Joint Venture Company We refer to the valuation report dated 29 January 2015 prepared by Knight Frank Asset Appraisal Limited (the Valuer ) in relation to the valuation of the right of name and portrait, trademark and other intellectual property rights relating to Miss Teresa Teng ( 鄧麗君 ) (the IP Rights ), the valuation of which constitutes a profit forecast (the Profit Forecast ) under Rule of the Listing Rules. We have discussed with the Valuer about different aspects including the bases and assumptions based upon which the valuation of the IP Rights has been prepared, and reviewed the valuation by the Valuer for which the Valuer is responsible. We have also considered the report dated 29 January 2015 from our reporting accountants, BDO Limited, in respect of the discounted future estimated cash flows in connection with the valuation of the IP Rights. We confirm that the Profit Forecast has been made after due and careful enquiry. Yours faithfully, For and on behalf of the Board of Seah Ang Chairman and Chief Executive Officer 5