CONNECTED TRANSACTION DISPOSAL OF MEDICAL EQUIPMENT BUSINESSES

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: 494) CONNECTED TRANSACTION DISPOSAL OF MEDICAL EQUIPMENT BUSINESSES The Board announces that on 30 June 2011, pursuant to the Framework Agreement of the same date entered into between IDS Group (a wholly owned subsidiary of the Company) and LF Distribution, IDS Group disposed of, and procured its subsidiaries to dispose of, the Medical Equipment Businesses in East Malaysia, Indonesia, Singapore and West Malaysia to LF Distribution's subsidiaries for a total cash consideration of US$57,700,000 (approximately HK$450,060,000), subject to upward or downward adjustment by reference to the Normal Working Capital with a limit of US$5,770,000 (approximately HK$45,006,000) for an upward adjustment. LF 1937 is a substantial shareholder of the Company, and LF Distribution is a wholly owned subsidiary of LF Accordingly, LF Distribution is a connected person of the Company and the Disposal constitutes a connected transaction for the Company under Chapter 14A of the Listing Rules. Since the highest applicable percentage ratio in respect of the Disposal is more than 0.1% but less than 5%, the Disposal is subject to the reporting and announcement requirements, but is exempt from the independent shareholders approval requirement, under the Listing Rules. FRAMEWORK AGREEMENT Date 30 June 2011 Parties (1) IDS Group, a wholly owned subsidiary of the Company (2) LF Distribution (3) IDS Sebor, as warrantor in respect of certain warranties relating to the East Malaysia Sale Shares - 1 -

2 Disposal Pursuant to the Framework Agreement, IDS Group disposed of, and procured (and guaranteed the performance of) its subsidiaries to dispose of, the Medical Equipment Businesses to LF Distribution's subsidiaries (the performance of which are guaranteed by LF Distribution). Completion of the Disposal took place on the date of the Framework Agreement with the intent that the title and/or benefits of the Medical Equipment Businesses will vest on the relevant purchasers as from 1 July The table below sets out the assets and parties involved in the Disposal:- Assets disposed of by the Sellers to the Purchasers (1) The East Malaysia Sale Shares Sellers IDS Sebor, a 60% owned subsidiary of IDS Group Purchasers LF Malaysia, a wholly owned subsidiary of LF Distribution (2) The Indonesia Business IDS Indonesia, a 84.15% owned subsidiary of IDS Group (3) The Singapore Business IDS Singapore, a wholly owned subsidiary of IDS Group (4) The West Malaysia Business IDS West Malaysia, a wholly owned subsidiary of IDS Group LF Indonesia, a subsidiary to be incorporated by LF Distribution or any other person as may be nominated by LF Distribution LF Singapore, a wholly owned subsidiary of LF Distribution LF Malaysia, a wholly owned subsidiary of LF Distribution Consideration The consideration for the Medical Equipment Businesses is US$57,700,000 (approximately HK$450,060,000) (the "Initial Consideration"), which was determined following arm s length negotiation between the parties and is approximately equal to a multiple of 9.7 times of the earnings before interest and taxes of the Medical Equipment Businesses for the financial year ended 31 December 2010, which was approximately US$5,910,000 (approximately HK$46,098,000) in aggregate. The Initial Consideration may be adjusted upwards or downwards by the amount by which the Normal Working Capital is greater or less than the Target Working Capital, subject to a limit of US$5,770,000 (approximately HK$45,006,000) (being 10% of the Initial Consideration) in the event of an upward adjustment. The adjustment amount - 2 -

3 will be determined between the parties within a period of approximately four months and a half following Completion. The allocation of the consideration for the Disposal is set out below: Assets The East Malaysia Sale Shares The Indonesia Business The Singapore Business The West Malaysia Business Consideration US$2,854,000 (approximately HK$22,261,200) US$2,917,000 (approximately HK$22,752,600) US$31,896,000 (approximately HK$248,788,800) (Note) US$20,033,000 (approximately HK$156,257,400) Note: The adjustment will be allocated to consideration for disposal of the Singapore Business. The Initial Consideration has been satisfied in cash at Completion. Any adjustment by reference to the Normal Working Capital will be satisfied in cash within five business days after determination of any required adjustment. INFORMATION ABOUT THE MEDICAL EQUIPMENT BUSINESSES The Medical Equipment Businesses operate in East Malaysia, Indonesia, Singapore and West Malaysia and involve the distribution, marketing and selling of medical equipment and of providing technical engineering and after sales support services in respect thereof. According to the audited financial statements of IDS Bumi for the year ended 31 December 2010, the net profits (before and after taxation and extraordinary items) of IDS Bumi for the year ended 31 December 2009 were approximately US$33,730 (approximately HK$263,094) and US$24,640 (approximately HK$192,192) respectively. The corresponding figures for the year ended 31 December 2010 were approximately US$191,412 (approximately HK$1,493,014) and US$133,920 (approximately HK$1,044,576) respectively. The net assets value of IDS Bumi as at 31 December 2010 was approximately US$264,261 (approximately HK$2,061,236). According to the unaudited financial statements of the Indonesia Business for the years ended 31 December 2009 and 31 December 2010, the net profits (before and after taxation and extraordinary items) of the Indonesia Business for the year ended 31 December 2009 were approximately US$210,000 (approximately HK$1,638,000) and US$210,000 (approximately HK$1,638,000) respectively. The corresponding figures for the year ended 31 December 2010 were approximately US$370,000 (approximately HK$2,886,000) and US$300,000 (approximately HK$2,340,000) respectively. The net assets value of the Indonesia Business as at 31 December 2010 was approximately US$357,000 (approximately HK$2,784,600). According to the unaudited financial statements of the Singapore Business for the years ended 31 December 2009 and 31 December 2010, the net profits (before and after taxation and extraordinary items) of the Singapore Business for the year ended

4 31 December 2009 were approximately US$2,600,000 (approximately HK$20,280,000) and US$2,160,000 (approximately HK$16,848,000) respectively. The corresponding figures for the year ended 31 December 2010 were approximately US$3,140,000 (approximately HK$24,492,000) and US$2,610,000 (approximately HK$20,358,000) respectively. The net assets value of the Singapore Business as at 31 December 2010 was approximately US$3,962,000 (approximately HK$30,903,600). According to the unaudited financial statements of the West Malaysia Business for the years ended 31 December 2009 and 31 December 2010, the net profits (before and after taxation and extraordinary items) of the West Malaysia Business for the year ended 31 December 2009 were approximately US$1,260,000 (approximately HK$9,828,000) and US$950,000 (approximately HK$7,410,000) respectively. The corresponding figures for the year ended 31 December 2010 were approximately US$1,910,000 (approximately HK$14,898,000) and US$1,430,000 (approximately HK$11,154,000) respectively. The net assets value of the West Malaysia Business as at 31 December 2010 was approximately US$4,154,000 (approximately HK$32,401,200). The original acquisition cost of the Medical Equipment Businesses for the Group was approximately US$11,277,000 (approximately HK$87,960,600). REASONS FOR AND BENEFITS OF THE DISPOSAL The Group is recognized as the world's leader in consumer goods design, development, sourcing and distribution. It manages the supply chain for retailers and brands worldwide through its three interconnected business networks, i.e. trading, logistics and distribution, and offers a spectrum of services that covers the entire end-to-end supply chain. LF Distribution is engaged in investment holding. LF Singapore, LF Malaysia and LF Indonesia are companies established for the holding and/or operation of the Medical Equipment Businesses. The Medical Equipment Businesses, which involve the distribution of durable medical equipment and which requires the provision of long-term maintenance services, is not consistent with the Group s overall on-shore distribution business strategy of focusing on food, healthcare, beauty and cosmetics and soft and hard goods and it offers little synergy opportunities for the rest of the Group s operations. The Disposal is estimated to generate a gain of approximately US$45,277,000 (approximately HK$353,160,600). Such gain is computed based on the consideration of US$57,700,000 (approximately HK$450,060,000) and the aggregated unaudited consolidated net assets of the Medical Equipment Businesses of approximately US$11,523,000 (approximately HK$89,879,400) as at 30 June 2011 and after deducting estimated expenses of US$900,000 (approximately HK$7,020,000). The proceeds of the Disposal will be utilised for future acquisitions. After Completion, IDS Bumi will cease to be a subsidiary of the Company

5 The Directors (including the independent non-executive Directors) consider the terms of the Framework Agreement (and the transaction agreements entered into pursuant to the Framework Agreement) to be on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole. Dr. Victor Fung Kwok King and Dr. William Fung Kwok Lun, both being directors of LF 1937, are considered to have a material interest in the Disposal by virtue of their interests in LF 1937, and therefore abstained from voting on the board resolution in respect of the Disposal. Mr. Benedict Chang Yew Teck, being a director of LF 1937, is considered to have a conflict of interest in the Disposal by virtue of his directorship with LF 1937, and therefore abstained from voting on the board resolution in respect of the Disposal. Mr. Spencer Theodore Fung, being the son of Dr. Victor Fung Kwok King, also abstained from voting on the board resolution in respect of the Disposal. LISTING RULES IMPLICATIONS LF 1937 is a substantial shareholder of the Company, and LF Distribution is a wholly owned subsidiary of LF Accordingly, LF Distribution is a connected person of the Company and the Disposal constitutes a connected transaction for the Company under Chapter 14A of the Listing Rules. Since the highest applicable percentage ratio in respect of the Disposal is more than 0.1% but less than 5%, the Disposal is subject to the reporting and announcement requirements, but is exempt from the independent shareholders approval requirement, under the Listing Rules. DEFINITIONS In this announcement, unless the context otherwise requires, the following terms shall have the following meaning: Board Company Completion Director(s) Disposal East Malaysia Business the board of directors of the Company Li & Fung Limited, a company incorporated in Bermuda with limited liability, the shares of which are listed on the Stock Exchange completion of the Disposal, which took place on the date of the Framework Agreement the director(s) of the Company the disposal of the Medical Equipment Businesses by IDS Group and its subsidiaries to LF Distribution s subsidiaries pursuant to the Framework Agreement and the transaction agreements referred to in the Framework Agreement the business carried on by IDS Bumi - 5 -

6 "East Malaysia Sale Shares" Framework Agreement Group Hong Kong HK$ "IDS Bumi" IDS Group IDS Indonesia IDS Sebor IDS Singapore IDS West Malaysia Indonesia Business LF Distribution LF Indonesia LF Malaysia LF Singapore LF 1937 Listing Rules 300,000 ordinary shares of RM1 each, being the entire issued share capital, of IDS Bumi which operates the East Malaysia Business the Framework Agreement dated 30 June 2011 between (1) IDS Group and (2) LF Distribution the Company and its subsidiaries at the date of this announcement, including IDS Group the Hong Kong Special Administrative Region of the People s Republic of China Hong Kong dollars, the lawful currency of Hong Kong IDS Bumi T.T.C. Sdn. Bhd. IDS Group Limited, a wholly owned subsidiary of the Company PT. IDS Marketing Indonesia IDS Sebor Sabah Holdings Sdn. Bhd. LF Asia (Singapore) Pte. Ltd. (formerly known as IDS Marketing (Singapore) Pte. Ltd. ) IDS Services (Malaysia) Sdn. Bhd. the business carried on by IDS Indonesia Li & Fung (Distribution) Limited PT. IDS Medical Systems Indonesia IDS Medical Systems (M) Sdn. Bhd. idsmed (S) Pte. Ltd. Li & Fung (1937) Limited, a substantial shareholder of the Company and a company incorporated under the laws of Hong Kong the Rules Governing the Listing of Securities on the Stock Exchange, as amended from time to time - 6 -

7 Medical Equipment Businesses Normal Working Capital "RM" Share(s) Target Working Capital Shareholders Singapore Business Stock Exchange US$ West Malaysia Business the business of distributing, marketing and selling medical equipment and of providing technical engineering and after sales support services in respect thereof, in East Malaysia, Indonesia, Singapore and West Malaysia, comprising the East Malaysia Business, the Indonesia Business, the Singapore Business and the West Malaysia Business the working capital in the Medical Equipment Businesses at Completion, as defined in the Framework Agreement Ringgit Malaysia, the lawful currency of Malaysia ordinary share(s) of HK$ each in the share capital of the Company at the date of this announcement US$10,800,000 (approximately HK$84,240,000), being the normal working capital employed in the Medical Equipment Businesses averaged over the twelve months period prior to 31 March 2011 holder(s) of the Shares the business carried on by IDS Singapore The Stock Exchange of Hong Kong Limited US dollar(s), the lawful currency of the United States of America the business carried on by IDS West Malaysia BOARD OF DIRECTORS As at the date hereof, the Board comprises the following Directors:- Non-Executive Directors: Victor Fung Kwok King (Chairman) Paul Edward Selway-Swift* Allan Wong Chi Yun* Franklin Warren McFarlan* Martin Tang Yue Nien* Benedict Chang Yew Teck Executive Directors: William Fung Kwok Lun (Deputy Chairman) Bruce Philip Rockowitz (Group President & Chief Executive Officer) Spencer Theodore Fung * Independent Non-executive Directors - 7 -

8 Unless otherwise stated, all references in this announcement to HK$ stated in brackets are for illustration only and are referenced to Hong Kong Dollars based on an approximate exchange rate of US$1 = HK$7.8. No representation is made that any amount in US$ had been or could be converted at the above rate or at any other rate or at all. By order of the Board Terry Wan Mei Chow Company Secretary Hong Kong, 30 June 2011 Websites: