By 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.
This announcement is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities of the Company.
COMMON SPLENDOR INTERNATIONAL HEALTH INDUSTRY GROUP LIMITED (formerly named G-Prop (Holdings) Limited) (Incorporated in Bermuda with limited liability) (Stock Code: 286) SHARE TRANSACTION PROPOSED SUBSCRIPTION OF 52% SHARES IN MULTI TALENT LIMITED IN RELATION TO THE INVESTMENT AND RESTRUCTURING OF THE HEALTHY FAST FOOD ELECTRONIC COMMERCE BUSINESS RESUMPTION OF TRADING THE ACQUISITIONThe Board is pleased to announce that on 6 January 2014, the Company, Billion High, Ms. Liu, Bonus Income, Jun Fu and the Other Contracting Parties entered into the Agreement, pursuant to which, among other things, the Company had conditionally agreed to subscribe for the Subscription Shares, representing approximately 52% of the issued share capital of the Target Company upon Completion, at a consideration of approximately HK$54,215,649, which will be satisfied partly by cash and partly by the allotment and issue of the Consideration Shares under the General Mandate.
LISTING RULES IMPLICATIONSAs each of the applicable percentage ratios in respect of the Acquisition is less than 5% and the Consideration includes the issue of the Consideration Shares, the Acquisition constitutes a share transaction under the Listing Rules for the Company and is therefore subject to notification, reporting and announcement requirements under Chapter 14 of the Listing Rules.
Shareholders and potential investors of the Company should be aware that Completion is subject to the satisfaction (or waiver, where applicable) of various conditions on or before the date of Completion and therefore Completion may or may not take place. Shareholders and potential investors of the Company should exercise caution when dealing in the securities of the Company.1
RESUMPTION OF TRADING
At the request of the Company, trading in the Shares on the Stock Exchange had been halted with effect from 9:00 a.m. on 7 January 2014 pending the release of this announcement. Application has been made
to the Stock Exchange for the resumption of trading with effect from 9:00 a.m. on 8 January 2014.
The Board is pleased to announce that on 6 January 2014, the Company, Billion High, Ms. Liu, Bonus Income, Jun Fu and the Other Contracting Parties entered into the Agreement, pursuant to which, among other things, the Company had conditionally agreed to subscribe for the Subscription Shares, representing approximately 52% of the issued share capital of the Target Company upon Completion, at a consideration of approximately HK$54,215,649, which will be satisfied partly by cash and partly by the allotment and issue of the Consideration Shares under the General Mandate.
Date: 6 January 2014
Parties: | (i) | the Company (as a subscriber) | |
(ii) | Billion High (as another subscriber) | ||
(iii) | Ms. Liu (as the original shareholder of the Target Company) Contracting Parties (being the related entities of Ms. Liu) | and the Other | |
(iv) | Bonus Income | ||
(v) | Jun Fu |
To the best of the knowledge, information and belief of the Directors, having made all reasonable enquiries, as at the date of the Agreement, each of the counter-parties to the Agreement and their respective ultimate beneficial owner(s) (where applicable) is third party independent of the Company and connected persons of the Company.
Acquisition
Pursuant to the Agreement, the Company has conditionally agreed to subscribe for the Subscription Shares, representing approximately 52% of the issued share capital of the Target Company upon Completion at the Consideration, which will be satisfied partly by cash and partly by the allotment and
issue of the Consideration Shares.
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Consideration
The Consideration in the amount of approximately HK$54,215,649 shall be satisfied by the Company in the following manners:
(i) the payment of US$5,015,916 (equivalent to approximately HK$38,892,249) for Subscription
Shares in cash by instalments; and
(ii) RMB12,000,000 (equivalent to approximately HK$15,323,400) to be satisfied by the allotment and issue of the Consideration Shares.
The Consideration was arrived at after arm's length negotiations among the parties on normal commercial terms with reference to, among other things, (i) the business development and prospects of the Target Group; and (ii) the payment term of the Consideration (including the price per Consideration Share).
Subject to the terms and conditions of the Agreement, the cash portion of the Consideration shall be payable in the following instalments:
(i) a sum of RMB3,788,571 (equivalent to approximately HK$4,837,816) will be payable as initial investment in the Target Group after the Completion having taken place and a sum of RMB1,151,429 (equivalent to approximately HK$1,470,317) after the fulfilment of the First Phase Conditions and the amount will be used as the operational expenses of the Project Shenzhen and the Headquarters;
(ii) a sum of RMB13,319,429 (equivalent to approximately HK$17,008,245) will be payable after the fulfilment of the Second Phase Conditions and such amount will be used as this operational expenses of the Project Guangzhou and the upgrade of the Headquarters; and
(iii) a sum of RMB12,197,714 (equivalent to approximately HK$15,575,871) will be payable after the fulfilment of the Third Phase Conditions and this amount will be used as the operational expenses of the Project Beijing, Project Shanghai and the further upgrade of the Headquarters.
If the three phase conditions or any individual phase condition mentioned above cannot be fulfilled, the Company and Billion High are entitled to terminate the further payment without bearing any obligations , among not limited to, the obligation of breach and disposal of the Target Group, among not limited to, the sale of the Target Group. Meanwhile, the paid capital and the value of the Consideration Shares (if applicable) with their 15% annual return rate should be returned by the Target Group to the Company and Billion.
The Consideration Shares shall be issued upon the satisfaction of the following conditions:
(i) Project Shenzhen achieving, on the fifth month of its operation (1) an average sales of over
5,000 orders per day, (2) a monthly profit and (3) a positive operational cash flow;
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(ii) completion of the Asset Transfer; and
(iii) the written approval from the Stock Exchange in respect of allotment and issue of the
Consideration Shares.
The price per Consideration Share shall be the 10-day average closing price per Share prior to the issue date subject to a maximum price of HK$1.00 per Share and shall in any event be not less than the floor price of HK$0.678 per Consideration Share. The aforesaid floor price represents:
(i) a discount of approximately 1.74% to the closing price of HK$0.69 per Share as quoted on the
Stock Exchange on the date of the Agreement;
(ii) a discount of approximately 0.59% to the average closing price of approximately HK$0.682 per Share as quoted on the Stock Exchange for the last five (5) consecutive trading days prior to and including the date of the Agreement; and
(iii) the average closing price of approximately HK$0.678 per Share as quoted on the Stock Exchange for the last ten (10) consecutive trading days prior to and including the date of the Agreement.
Based on the aforesaid floor price, a maximum of 22,600,885 Consideration Shares will be allotted and issued by the Company, representing 0.93% of the existing issued share capital of the Company and
0.92% of the enlarged issued share capital of the Company.
The Consideration Shares, will be allotted and issued to Bonus Income. Bonus Income had invested an aggregate amount of RMB9,500,000 (equivalent to approximately HK$12,131,025) in the Target Assets. Bonus Income had agreed to give up its investment in the Target Assets at the investment cost plus annual return rate of 15% per annum and exit from such investment in return for the Consideration Shares.
The Consideration Shares will be issued pursuant to the General Mandate. Under the General Mandate, a maximum of 485,651,001 new Shares may be allotted and issued. As at the date of this announcement, no Share has been issued under such General Mandate.
An application will be made by the Company to the Stock Exchange for the listing of, and permission to deal in, the Consideration Shares. The Consideration Shares, when issued upon the satisfaction of the above conditions, will rank pari passu in all respects with the then existing Shares in issue.
Completion is conditional upon fulfilment of the following conditions:
(i) all necessary consents and approvals in relation to the increase in share capital and the allotment of the shares in the Target Company pursuant to the Agreement having been obtained by Ms. Liu, the Company, Billion High and the Target Company;
(ii) there being no facts or circumstance which may constitute a breach or potential breach of the
Agreement by Ms. Liu;
(iii) a legal opinion issued by a PRC legal counsel in relation to Shenzhen Zheng Fu Yi Catering having been obtained to the satisfaction of the parties;
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(iv) all necessary consents and approvals in relation to consummation of the transactions under the
Agreement by Ms. Liu having been obtained; and
(v) the audit / due diligence of the Target Group having been completed to the satisfaction of the
Company and Billion High.
Subject to the fulfilment or waiver (where applicable) of all the above conditions precedent, Completion shall take place on or before 31 January 2014 or such later date as the parties to the Agreement shall agree in writing.
Upon Completion, the Target Company will be indirectly held as to approximately 52% by the Company and will be accounted for as a non-wholly owned subsidiary in the financial statements of the Company.
With respect to each of the Project Shenzhen, Project Guangzhou, Project Beijing and Project Shanghai, where Ms Liu and the Target Group are unable to (1) cause the relevant Project to achieve, on the fifth month of its operation (i) an average sales of over 5,000 orders per day, (ii) a monthly profit, (iii) a positive operational cash flow; and (2) the accumulated net profit or accumulated cash flow reach the investment cost within 18 months since the commencement of its sales, Ms Liu shall be liable to transfer 2.5% of the issued capital in the Target Company to the Company and Billion High at nil consideration.
Pursuant to the Agreement, Ms. Liu, Bonus Income, Jun Fu and the Other Contracting Parties have agreed not to compete with the Target Group by carrying out the same or similar business as the Business after Completion.
The Target Company was incorporated as a company with limited liability in the Cayman Islands on 3
January 2012. As at the date of this announcement, the Target Company is an investment holding company and the Target Group is principally engaged in the catering business in the PRC but has not commenced its business.
According to the unaudited consolidated financial statements of the Target Group, the net loss before taxation and net loss after taxation of the Target Group for the financial year ended 31 December 2013 was Nil.
According to the unaudited consolidated financial statements of the Target Group, the net asset value of the Target Group for the financial year ended 31 December 2013 was US$1.00 (equivalent to
approximately HK$7.76.
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PRINCIPAL ACTIVITIES OF THE COMPANYThe Group is mainly engaged in the businesses of investment and finance, property investment and health business.
REASONS FOR THE ACQUISITION
The Directors consider it is to the benefit of the Group and the Shareholders as a whole for the Group to expand into other new business that could generate more income for the Group as and when an appropriate opportunity emerges.
According to the announcement of the Company dated 15 October 2013, the Group had entered into a formal lease agreement in relation to a lease in Biological Island and the Group expected the pre-sale of membership would be started in November 2013 and the health management project could be launched after the lunar New Year in January 2014. The pre-sale of the membership has already been in progress in November 2013; however, the first health management centre in the Biological Island is going to partly testing operation after the lunar new year in February 2014 due to the delay of decoration progress and staff recruitment. In the meantime, pursuant to the announcement of the Company dated
30 December 2013, the change of Company's name had completed and the Company was renamed as
Common Splendor International Health Industry Group Limited and the Shares has been traded in the Stock Exchange with its new name officially with effect from 3 January 2014. Therefore, the Group will mainly engaged in the development of health industry in future which comprise of the medical services with directly relationship with health, health management, medicines and health products and any other industries which closely related to health, covering all the daily basic necessities.
The proposed acquisition of the 52% shares of the Target Company is the further development of the Group in health industry. The Target Group will carry on the proposed healthy fast food business through electronic commerce. "The fast food business through electronic commerce" is different from the traditional fast food business. It is mainly engaged in health catering. It makes use of the internet techniques to sale instead of the physical stores. Its target customers are the white-collar working class in the central business districts and other commercial areas in the first and second tier cities in the PRC. The population of the white-collar class at the cities in the PRC is tremendous and therefore it is a great difficulty for them to solve their lunch problem. The lunch may be unaffordable but the cheaper may be unsafe for them. Taking lunch outside, it is hard to find a seat; ordering takeaway meals, it is too unpalatable to accept by them. All the scenarios mentioned above are the issues for the white-collar. The proposed healthy fast food electronic commerce business is fully designed to solve such lunch problems of the white collar. With the application of latest internet techniques, a system to guarantee the source of the food is established. With operation of a central kitchen and the delivery of the meals to the customers' offices by the designated heat preservation vehicles, it can solve the food safety and quality problems arising from the process of the food production and the delivery. With the aid of the electronic commerce, placing the orders through internet creates the data base which can be used in the analysis on the change of the customers' taste in order to assist the preparation of related sale strategy.
In conclusion, considering the increase in demand for high quality, healthy, safety and delicious fast food and meal delivery services as a result of the economic growth and rapid increase in disposable income of working class especially the white-collar class in the PRC in the recent years, and the 10-year and rich catering services experience of Ms. Liu and her management team, the Directors are of the view that the Target Company provides an opportunity for the Group to broaden its revenue source and
income base by diversifying its business into the electronic healthy fast food business in the PRC. It is
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expected to officially commence the sale of Project Shenzhen after the lunar New Year in February
2014 and give impetus to the sale of Project Guangzhou, Shanghai and Beijing phase by phase.
In light of the above, the Directors (including the independent non-executive Directors) believe that the terms of the Agreement are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.
Billion High is a company incorporated in the British Virgin Islands with limited liability whose principal business is investment holding and whose sole shareholder is Mr. Huang Zhu Liang .
Ms. Liu is a merchant and the spouse of Mr. Yin. She is also a shareholder and a director of Shenzhen Zheng Fu Yi Investment Management Company Limited* (
