SHUM YIP INV<0604> - Announcement
The Stock Exchange of Hong Kong Limited (the ``Stock Exchange'')
takes no responsibility for the contents of this announcement,
makes no representation as to its accuracy or completeness and
expressly disclaims any liability whatsoever for any loss
howsoever arising from or in reliance upon the whole or any
part of the contents of this announcement.
SHUM YIP INVESTMENT LIMITED
(Incorporated in Hong Kong under the Companies Ordinance)
CONNECTED TRANSACTION
Shum Yip Investment Limited (the ``Company'', together with
its subsidiaries, the ``Group'') has entered into a conditional
agreement (the ``Agreement'') with Shum Yip Holdings Company
Limited (``Shum Yip Holdings''), the controlling shareholder
of the Company, to acquire the entire voting issued share
capital of Shum Yip Telecommunications Investment Limited
(``SYT'') from Shum Yip Holdings for HK$165 million (the
``Acquisition'').
The consideration for the Acquisition of HK$165 million will
be satisfied by cash from the internal resources of the Group.
The consideration, which represents about a 15 times multiple
of the adjusted net profit for the year ended 31st December,
1999, has been agreed after arm's length negotiations and is
based on normal commercial terms. The directors of the Company
(the ``Directors'') believe that the Acquisition represents
a good investment opportunity as it will enhance the Group's
earning base and can provide the Group with ample opportunities
for future development in broad band internet services
business.
The Acquisition constitutes a connected transaction for the
Company under the Rules Governing the Listing of Securities
on The Stock Exchange of Hong Kong Limited (the ``Listing
Rules''), which requires approval from the independent
shareholders of the Company (the ``Independent Shareholders'')
at an extraordinary general meeting of the Company (``EGM'').
A circular containing further information will be sent to the
shareholders of the Company as soon as practicable.
CONDITIONAL AGREEMENT DATED 18th February, 2000
Parties:
Vendor : Shum Yip Holdings
Purchaser : the Company
Assets acquired : 100% of the voting issued share capital
of SYT
Information on SYT:
SYT was established in 1995 in Hong Kong as an investment holding
company. The sole investment of SYT is a 21.1% issued share
capital in \raster(55%,p)="c01" Shenzhen Topway Video
Communication Co., Ltd. (``Topway'', together with its
subsidiaries, the ``Topway Group''). The balance of 78.9%
issued share capital of the Topway is held by five independent
third parties who are not connected with the Company or any
of its subsidiaries or the directors, chief executives and
substantial shareholders of the Company or their respective
associates. The Topway Group is principally engaged in the
provision of network technology services to cable television
in Shenzhen and other network consultancy services in relation
to the information and media industry in the People's Republic
of China (the ``PRC'').
The cable television network in Shenzhen commenced
installation in 1994 and currently has the fibre-optic network
which has a total length of more than 1,000 kilometers, which
is approximately 68,000 fibre kilometers, covering
approximately 600,000 households. As at 31st December, 1999,
there were about 320,000 subscribers. The services provided
by (Shenzhen Cable Television) through the network which the
Topway Group provides services to include (i) transmission of
programmes produced or edited by Shenzhen Cable Television and
from external sources; (ii) transmission and processing of
digital information such as online stock trading, provision
of internet services and intellectual property management; and
(iii) television shopping. Topway provides technology
support in connection with installation, content processing
and customer services.
The board of directors of Topway currently comprises 8
directors, two of which are appointed by SYT. Upon the
completion of Acquisition, all 2 directors appointed by SYT,
will be nominated by the Company.
The consolidated net tangible asset value of Topway as at 31st
December, 1999 according to Topway's management accounts was
about RMB447 million (equivalent to about HK$414 million). The
table below sets out the consolidated profit before and after
taxation and minority interests of SYT prepared and audited
in accordance with PRC accounting standards and adjusted by
the Company, but not audited in accordance with HK GAAP for
the year ended 31st December, 1998 and the unaudited
consolidated profit before and after taxation and minority
interests of SYT in accordance with PRC accounting standards
and adjusted, but no yet audited, in accordance with HK GAAP
for the year ended 31st December, 1999.
Year ended Year ended
31st December, 1998 31st December, 1999
RMB (equivalent to RMB (equivalent to
about HK$) about HK$)
Profit before taxation 63.2 58.5 66.8 61.9
and minority interest million million million million
Profit after taxation 53.3 49.4 56.6 52.4
and minority interest million million million million
(``Adjusted Net Profit'')
Consideration and payment terms:
The consideration payable by the Company is HK$165 million,
all of which will be satisfied by cash from the internal
resources of the Group.
The consideration was arrived at based on a 15 times multiple
of the attributable Adjusted Net Profit. The terms of the
Acquisition including, inter alia, the consideration, were
arrived at after arm's length negotiations based on normal
commercial terms.
Condition of Agreement:
Completion of the Agreement is conditional upon the approval
of the Agreement and the transactions contemplated thereunder
by an ordinary resolution of the Independent Shareholders at
an EGM.
If the above condition is not fulfilled within 60 days after
signing of the Agreement or such later date as may be agreed
between the parties, the Agreement shall terminate.
Completion of the Acquisition :
Expected to be completed on the third business day after the
satisfaction of the above condition.
Reasons for the Acquisition
The Group is principally engaged in property development and
investment, provision of transportation services and
investment in infrastructure. The Directors believe that in
recent years, Shenzhen Municipal Government has put
substantial efforts to support the development of high-tech
industries in Shenzhen. Being a subsidiary of Shum Yip
Holdings, the representative organisation of Shenzhen
Municipal Government, the Company, in addition to its existing
business, will also be engaged in high-tech industries. The
Directors believe that with the prominent growth in the net
profit of Topway, the Acquisition will enhance the Group's
earning base and enrich the Group's investment portfolio.
Accordingly, the Acquisition is in the best interest of the
Company. Furthermore, the Directors believe that with
increased importance of development of the information
industry in the internet arena, the Acquisition will provide
the Group with ample opportunities for future development in
broad band internet services business as the cable network can
be used as backbone infrastructure for internet services.
General
Currently, Shum Yip Holdings holds about 57.28% of the
Company's issued share capital. The Acquisition constitutes
a connected transaction for the Company under the Listing Rules,
which requires approval from Independent Shareholders at an
EGM, in which Shum Yip Holdings will abstain from voting. Mr.
Wong Po Yan (``Mr. Wong''), an independent Director has been
appointed to advise the Independent Shareholders in respect
of the terms of the Acquisition. An independent financial
adviser has been appointed to advise Mr. Wong in respect of
the terms of the Acquisition. A circular containing further
details of the Acquisition, together with the recommendation
from Mr. Wong, the advice from the independent financial
adviser and a notice convening an EGM of the Company to consider
and, if thought fit, to approve the Acquisition, will be
despatched to the shareholders of the Company as soon as
possible.
Note: In this announcement, Renminbi has been converted into
Hong Kong dollars at the rate of HK$1 = RMB 1.08 for indication
purpose only.
By order of the Board
Shum Yip Investment Limited
Sun Ju Yi
Deputy Managing Director
Hong Kong, 18th February, 2000
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