PROPOSED ACQUISITION OF A PROPRIETARY BILLING AND PAYMENT SYSTEM

Transcription

1 PROPOSED ACQUISITION OF A PROPRIETARY BILLING AND PAYMENT SYSTEM 1. INTRODUCTION The board of directors (the Directors ) of DeClout Limited (the Company, and together with its subsidiaries, the Group ) is pleased to announce that Corous360 Pte Ltd (the Purchaser ), a wholly-owned subsidiary of the Company, has on 29 November 2012 (the Signing Date ), entered into a sale and purchase agreement (the Agreement ) with Infocomm Asia Holdings Pte Ltd (the Vendor ), pursuant to which the Purchaser will purchase a proprietary billing and payment system as well as the associated operational know-how called the Passport System from the Vendor, for a total cash consideration of US$2 million (equivalent to approximately S$2,460,000, based on an exchange rate of US$1:S$1.23 as at 29 November 2012) (the ). Based on the terms of the Agreement, the Purchaser will pay S$1 as an option fee, for the option to acquire the Passport System (the Option ) and a refundable deposit of US$500,000 (the Deposit ). The Option will be valid for 4 months from the Signing Date (the Option Period ). During the Option Period, the Purchaser will test the Passport System and assess its suitability for integration with the Purchaser s backend systems as potential for further enhancements in order to roll-out the Purchaser s regional unified payment infrastructure. If the Option is exercised, the Deposit plus an additional US$500,000 would have been deemed to be applied to the initial consideration (the Initial Consideration ) of US$1 million. Thereafter, the Purchaser will pay the balance consideration of US$1 million in 5 equal tranches upon each new online game launched by the Vendor. If the Option is not exercised or if certain conditions occur, as set out in paragraph 5, the Purchaser is entitled to a full refund of the Deposit paid. Barring any unforeseen circumstances, the Purchaser expects to exercise the Option within 1 to 3 months from the Signing Date, with completion of the expected to take place within 6 to 12 months from the exercise of the Option. 2. INFORMATION ON THE VENDOR The Vendor is a private limited company incorporated in the Republic of Singapore on 16 November 2004, with its registered office at 35 Tai Seng Street, #01-01 Tata Communications Exchange, Singapore , and is in the business of online games publishing in Southeast Asia, Hong Kong, Taiwan and Macau. The Vendor is one of the major customers of the Purchaser for its Games Cloud Infrastructure business. The Vendor has also signed a contract with the Purchaser on the Signing Date to outsource to the Purchaser the processing of

2 billing and payment transactions for the Vendor s games published in Southeast Asia, starting January 2013 for an initial period of 3 years. 3. INFORMATION ON THE PASSPORT SYSTEM The Passport System refers to the billing, payment and membership systems owned by the Vendor and which can be used in but is not limited to Singapore, Malaysia, Indonesia and Thailand respectively. The Passport System comprises: source code, documentation, manuals, system architecture, network architecture; and operational know-how which includes but is not limited to setting up of the system, operation processes, maintenance, report generation, billing and payment integration. 4. PROPOSED ACQUISITION The purchase consideration payable by the Purchaser to the Vendor for the purchase of the Passport System shall be a total of US$2 million in cash (the Purchase Consideration ), payable as follows: upon the Purchaser exercising the Option, the Deposit and the additional payment of US$500,000 will be applied towards the Initial Consideration; a balance consideration of US$1 million (the Balance Consideration ), consisting of 5 equal payments of US$200,000 to be paid upon each launch of a new game title by the Vendor, on the Purchaser s game platform, subject to the following conditions: (i) (ii) (iii) (iv) (v) payment processing revenues related to the game title passes through to the Purchaser; the game is self-published by the Vendor under the Vendor s brand in the Southeast Asian countries in which the Vendor operates; a Closed Beta version of the game title is launched in one or more of the Southeast Asian Countries in which the Vendor operates; the Vendor has at least a 3 year exclusive right to publish the game title in one or more of the Southeast Asian countries; and at least one of the Southeast Asian countries in which the game title is launched has an addressable market of more than 1 million gamers.

3 The Purchase Consideration was arrived at on a willing-buyer and willing-seller basis after arms length negotiations and based on various factors, amongst others: (i) (ii) (iii) (iv) the manpower, cost, and level of difficulty of developing such a system in-house; time savings by the Purchaser allowing shorter time-to-market; payment system know-how transfer from the Vendor; and the availability of such comparable systems in the market. 5. CONDITIONS OF THE PROPOSED ACQUISITION The exercising of the Option is expected to take place within 1 to 3 months of the Signing Date (during the Option Period) after all the conditions specified below have been fulfilled or waived, as the case may be (the Completion Date ). The exercising of the Option is conditional upon: the Vendor delivering the following to the Purchaser: (i) (ii) (iii) the source code of the Passport System in the form of both printed listings and CD ROM; the operating manuals; and all other materials necessary to enable a reasonably skilled programmer to correct, modify and enhance the Passport System without reference to any other person or document, the Purchaser, through testing the Passport System, determining that the system is suitable for its use to create its own proprietary system. If any of the conditions set out above has not been satisfied within the Option Period, the Agreement shall cease, the Vendor to refund the Deposit to the Purchaser, and the Purchaser is to cease testing the Passport System and return all of items (i) to (iii). Thereafter, neither party shall have any obligations and liabilities save for any antecedent breaches of the terms thereof. The completion of the will occur after i) the Option is exercised, and ii) the Vendor launches all 5 games which meets the criteria in paragraph 4 above which is expected to take place within 6 to 12 months from the Signing Date. There are provisions for a refund of the Purchase Consideration (the amount that has been paid at that point in time) if the following conditions occur within 4 years of the Signing Date:

4 (c) (d) the Vendor ceases for any reason to use any part of the services of the Purchaser to process billing and payment transactions for its games in any of its markets, or if the Vendor ceases for any reason to use any of the Purchaser s services on an exclusive basis; the Vendor goes into liquidation or if the Vendor shall have a liquidator, receiver or manager, or judicial manager appointed over it or any part of its assets or undertaking; the Vendor undergoes any change in control, which results in the Vendor ceasing for any reason to use any of the Purchaser s services on an exclusive basis; or the Vendor shall sell, transfer or otherwise dispose of substantially all or any material part of its business, assets or undertaking. 6. FUNDING FOR THE PROPOSED ACQUISITION The Purchase Consideration will be funded by the proceeds raised from the initial public offering of the Company (the IPO ), in line with the disclosure in the IPO offer document that S$3.6 million of the proceeds will be allocated towards Investment in our games cloud business. 7. RATIONALE FOR THE PROPOSED ACQUISITION The key rationale for the is: 1) to build our Unified Payment Infrastructure layer and laying the key foundation for our Gamers Community Portal. Through the, we save time, cost and development efforts for payment software by leveraging on a proven system used by a reputable publisher for a sizeable market; 2) to kick-start our payment processing business for developers and publishers. The Vendor is also outsourcing billing and payment processing services to the Purchaser as detailed in paragraph 2 above; and 3) to enable the transfer of payments operational know-how and payment processing methodologies from the Vendor for use in Singapore, Malaysia, Indonesia and Thailand.

5 8. FINANCIAL EFFECTS OF THE PROPOSED ACQUISITION The pro-forma financial effects of the set out below are for illustrative purposes and therefore not indicative of the actual financial performance or position of the Group immediately after completion of the. Net Tangible Assets ( NTA ) The effect on the NTA per share, assuming that the had been completed on 31 December 2011, is set out as follows: Adjusted Consolidated NTA (1) attributable to shareholders of the Company Before the S$16,157,000 After the S$13,697,000 Number of shares in the capital of the Company as at FY2011 (as defined herein) and adjusted for the issuance of new shares and share split pursuant to the Company s initial public offering in ,507, ,507,680 Consolidated NTA per share (1) (cents) e: (1) Adjusted Consolidated NTA is based on the audited NTA for the financial year ended 31 December 2011 ( FY2011 ) after adjusting for the increase in share capital amounting to S$11,850,500 during the year pursuant to the Company s initial public offering on 24 October 2012 and the restructuring exercise in connection therewith. Earnings The effect on earnings per share ( EPS ), assuming that the had been completed on 1 January 2011, is set out as follows: Net profit attributable to owners of the parent of the Company Number of shares in the capital of the Company as at FY2011 and adjusted for the issuance of new shares and share split pursuant to the Company s initial public offering in 2012 Before the After the S$1,062,000 S$570,000 (1) 204,507, ,507,680 EPS (cents) e: (1) The computation of EPS after the took into consideration amortisation expense of S$492,000 per year in relation to the Passport System and does not include any potential revenues that may be derived from the.

6 9. RELATIVE FIGURES BASED ON RULE 1006 OF THE LISTING MANUAL SECTION B: RULES OF CATALIST The relative figures in relation to the computed based on the Group s latest audited financial statements for FY2011 and in accordance with Rule 1006 of the Listing Manual Section B: Rules of Catalist (the Catalist Rules ) of the Singapore Exchange Securities Trading Limited (the SGX-ST ) are as follows:- Bases of calculation Relative figures The net asset value of the assets to be disposed of, compared with the Group s net asset value The net profits attributable to the assets acquired, compared with the Group s net profit (1) (c) Aggregate value of the consideration given, 6.2% compared with the Group s market capitalisation (2) (d) (e) es: The number of equity securities issued by the Group as consideration for an acquisition, compared with the number of equity securities previously in issue The aggregate volume or amount of proven and probable reserves to be disposed of, compared with the aggregate of the Group's proven and probable reserves (1) as there is no net profit directly attributable to the assets to be acquired. (2) The Company s market capitalisation of approximately S$39,817,645 was computed based on the Company s existing issued share capital of 204,507,680 shares and the volume weighted average price of the Company s shares of S$ on 28 November 2012 (being the last traded day preceding the date of the Agreement). Having regard to the above, the constitutes a discloseable transaction pursuant to Rule 1010 and read together with Rule 1006 of the Catalist Rules. 10. INTEREST OF THE DIRECTORS AND CONTROLLING SHAREHOLDERS None of the Directors have any interest, direct or indirect, in the. None of the controlling shareholders of the Company (as far as the Directors are aware) have any interest, direct or indirect, in the.

7 11. SERVICE CONTRACTS OF DIRECTORS There are no directors who are proposed to be appointed to the Company in connection with the. 12. DOCUMENT FOR INSPECTION The Agreement is available for inspection during normal business hours from 9.00 a.m. to 5.00 p.m. at the registered office of the Company at 29 Tai Seng Avenue, #05-01 Natural Cool Lifestyle Hub, Singapore for a period of 3 months from the date of this announcement. 13. ANNOUNCEMENT Further announcements on the will be made in due course as and when appropriate. 14. CAUTIONARY STATEMENT As there is no assurance that the will be completed as it is subject to the fulfillment of, inter alia, the conditions set out above and accordingly, shareholders are advised to refrain from taking any action which may be prejudicial to their interests before seeking advice from their brokers, bank managers, solicitors or other professional advisers (as appropriate). BY ORDER OF THE BOARD Wong Kok Khun Chairman and Group Chief Executive Officer 29 November 2012 This announcement has been prepared by the Company and its contents have been reviewed by the Company s sponsor ( Sponsor ), Canaccord Genuity Singapore Pte. Ltd., for compliance with the relevant rules of the Singapore Exchange Securities Trading Limited ( SGX-ST ). Canaccord Genuity Singapore Pte. Ltd. has not independently verified the contents of this announcement. This announcement has not been examined or approved by the SGX-ST and the SGX-ST assumes no responsibility for the contents of this announcement, including the correctness of any of the statements or opinions made, or reports contained in this announcement. The contact person for the Sponsor is Ms Karen Soh, Deputy Managing Director, Corporate Finance, Canaccord Genuity Singapore Pte. Ltd. at 77 Robinson Road #21-02 Singapore , telephone (65)