DECLOUT LIMITED
(Incorporated in the Republic of Singapore on 21 August 2010)
(Company Registration Number: 201017764W)
PROPOSED INCREASE IN SHAREHOLDING IN A SUBSIDIARY AND
ACQUISITION OF INDIRECT SUBSIDIARIES
1.
INTRODUCTION
The board of directors (the "Board" or "Directors") of DeClout Limited (the "Company", and
together with its subsidiaries, the "Group") refers to its announcement dated 3 November 2015
(“Initial Acquisition Announcement”), where it was announced that the Company had entered
into a sale and purchase agreement dated 2 November 2015 (“Initial SPA”) with its subsidiary,
Corous360 Pte. Ltd. (“Corous360”), Jupiter-Soft Pte. Ltd. (the “Vendor”), Sng Kim Guan (the
“Guarantor”) and Play-E Pte. Ltd. (the “Target”) for the acquisition of 75.0% of the issued and
paid-up share capital of the Target from the Vendor (“Initial Acquisition”). The Initial
Acquisition was completed on 2 November 2015. Please refer to the Initial Acquisition
Announcement for more details on the Initial Acquisition.
The Board wishes to announce that the Company is proposing to acquire the remaining 25.0%
of the issued and paid-up share capital of the Target from the Vendor through Corous360,
following which the Target will become a wholly-owned subsidiary of Corous360.
2.
INFORMATION ON THE TARGET AND THE VENDOR
The Target was incorporated in Singapore on 18 May 2015 (Company Registration Number
201523435W). As at the date of this announcement, the Target has an issued and paid-up
share capital of S$201,000 comprising 201,000 ordinary shares. The Target is primarily
engaged in the business of providing electronic commerce platform for game distributors.
Based on the audited financial statements of the Target for the financial period ended 31
December 2015, the net profit before tax of the Target was approximately S$636,000, and the
net asset value and net tangible asset value of the Target as at 31 December 2015 were
approximately S$897,000 and S$717,000 respectively.
Based on the latest management accounts of the Target for the six-month financial period
ended 30 June 2016, the net profit before tax of the Target was approximately S$552,000, and
the net asset value and net tangible asset value of the Target as at 30 June 2016 were
approximately S$1,436,000 and S$1,276,000 respectively.
No independent valuation was conducted on the Target.
The directors of the Target are Choo See Wee and Tay Chia Ping (Zheng Jiabin).
The Vendor is a Singapore-incorporated company wholly-owned by the Guarantor, a veteran
entrepreneur and founder of a gaming retail chain, Funz Centre Pte. Ltd. The sole director of
the Vendor is Choo See Wee. The Vendor, its director and the Guarantor are not associates of,
or related to, the Directors or controlling shareholders of the Company and their respective
associates.
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3.
SUMMARY OF THE PROPOSED TRANSACTIONS
The Company has entered into the following agreements today:
(a) a sale and purchase agreement (“SPA”) with the Vendor and Corous360, pursuant to which
the Vendor will transfer its entire shareholding interest of 50,250 ordinary shares,
representing 25.0% of the issued and paid-up share capital of the Target as at the date of
the SPA, to Corous360 (“Proposed Acquisition”); and
(b) a supplemental agreement (“Supplemental Agreement”) with the Vendor, Corous360, the
Target and the Guarantor to vary certain terms of the Initial SPA (“Proposed Variation”).
In addition, prior to and as a condition precedent to Completion (as defined herein), the Target
intends to enter into agreements with third parties to (i) acquire 75.0% of the interests in PLAYe
Hong Kong Limited (“PLAYe HK”); and (ii) incorporate a new subsidiary in Singapore, Play-E
(Taiwan) Pte. Ltd. (“Play-E TW”) (collectively, “Proposed Acquisition of Subsidiaries”). The
Target will hold 75.0% of the interests in Play-E TW.
The respective minority shareholders of PLAYe HK and Play-E TW, post-completion of the
Proposed Acquisition of Subsidiaries, are not associates of, or related to, the Directors or
controlling shareholders of the Company and their respective associates.
The Proposed Acquisition, Proposed Variation and Proposed Acquisition of Subsidiaries are
collectively, the “Proposed Transactions”.
3.1
Proposed Acquisition
Consideration
The consideration for the Proposed Acquisition (“Consideration”) is up to S$6,287,501, which
shall be satisfied as follows:
(a) S$1.00 payable in cash to the Vendor on completion of the Proposed Acquisition
(“Completion”); and
(b) a refundable prepayment amounting to S$6,287,500 (“Prepayment”), to be satisfied by the
allotment and issuance of new ordinary shares and/or a transfer of treasury shares in the
capital of the Company to the Vendor and/or its permitted nominee amounting to an
aggregate of 31,400,000 ordinary shares in the issued and paid-up share capital of the
Company ("Consideration Shares") at approximately S$0.2002 per Consideration Share
(“Issue Price”), credited as fully paid.
The Issue Price represents a premium of 1.06% to the volume weighted average price
(“VWAP”) of S$0.1981 of the Company’s shares (“Shares”) for trades done on the Singapore
Exchange Securities Trading Limited ("SGX-ST") on the date of the SPA.
The Prepayment shall be refundable to Corous360 in cash in the event that the Target fails to
meet any of the following targets ("KPIs"):
(a) audited consolidated net tangible assets (“NTA”) of the Target, its subsidiaries and its
associated companies (“Target Group”) of at least S$2.0 million as at 31 December 2016;
and
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(b) one (1) million users registered with the Target’s electronic commerce platform as
determined by Corous360 by 31 December 2016.
If the Target fails to meet any of the KPIs, the Vendor shall, not later than one (1) month from
the release of the audited consolidated accounts of the Target Group for the financial year
ending 31 December 2016 (“FY2016”), refund to Corous360 the full amount of the Prepayment
in cash.
Conditions Precedent
The Proposed Acquisition is subject to, inter alia, the following conditions precedent:
(a) Corous360 having been satisfied at its sole discretion with the due diligence conducted on
the Target's title to its assets and all aspects of the Target, including but not limited to
financial, legal, tax and other commercial due diligence as would be required for
transactions of such nature;
(b) all necessary approvals from the boards of directors of Corous360, the Company and the
Vendor in respect of the transactions contemplated in the SPA upon the terms and
conditions set out in the SPA having been obtained;
(c) (if required) all necessary approvals from the shareholders of Corous360, the Company
and the Vendor in respect of the transactions contemplated in the SPA upon the terms and
conditions set out in the SPA having been obtained;
(d) all approvals, consents and permits (if any) as may be necessary from any third party,
governmental or regulatory body or competent authority having jurisdiction over the
transactions contemplated under the SPA or to the entry into and completion of the SPA by
the parties to the SPA (“Parties”) (including but not limited to the SGX-ST), being granted
or obtained, and being in full force and effect and not having been withdrawn, suspended,
amended or revoked, and if such consents or approvals are granted or obtained subject to
any conditions, such conditions being reasonably acceptable to the Parties;
(e) the completion of the Proposed Acquisition of Subsidiaries;
(f) the Vendor having performed, satisfied and complied with all covenants, agreements and
conditions required by the SPA to be performed or complied with by the Vendor;
(g) the warranties in the SPA made by the Vendor being true and correct on and as of the date
of completion as though made on, applicable at, and updated through and including, that
time;
(h) the execution and performance of the SPA by the Parties not being prohibited or restricted,
curtailed, hindered, impaired or otherwise affected to a material adverse extent, by any
relevant statute, order, rule, directive or regulation promulgated by any legislative or
regulatory body or authority after the date of the SPA;
(i) there being no breach of any of the terms and conditions of the SPA;
(j) there being no material adverse change to assets, business, financial condition, prospects
or results of operations of the Target as a whole having occurred;
(k) the Target not being wound up, in receivership, under judicial management or
administration, or subject to any scheme of arrangement; and
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(l) there being no litigation, winding up (whether initiated by creditors or otherwise), judicial
management, arbitration, prosecution or other legal proceedings having been instituted,
announced or threatened by or against or remaining outstanding against the Target which
could have a material adverse effect on the Target.
Consideration Shares
The Consideration Shares represent approximately 4.9% of the existing issued and paid-up
share capital of the Company as at the date of this announcement, and 4.7% of the enlarged
issued and paid-up share capital of the Company upon completion of the Proposed
Transactions, assuming all the Consideration Shares are satisfied by an allotment and issuance
of new Shares.
The Consideration Shares will be allotted and issued pursuant to the general share issue
mandate (“2016 Share Issue Mandate”) granted by shareholders of the Company at the annual
general meeting of the Company held on 28 April 2016 (“2016 AGM”).
As at the date of the 2016 AGM, the total number of issued Shares (excluding treasury Shares)
was 618,850,590. Accordingly, the Company could issue up to 618,850,590 new Shares on a
pro-rata basis and up to 309,425,295 new Shares on a non pro-rata basis under the 2016 Share
Issue Mandate. As at the date of this announcement, the Company has issued 20,000,000 new
Shares on a non pro-rata basis pursuant to the 2016 Share Issue Mandate, and taking into
consideration the aggregated new Shares to be issued pursuant to the Company’s outstanding
share options and share awards, the proposed allotment and issuance of the Consideration
Shares still falls within the limit of the 2016 Share Issue Mandate. Save for the foregoing, the
Company does not have any outstanding warrants or other convertibles as at the date of this
announcement.
The Consideration Shares, when allotted and issued, shall be credited as fully paid for, free and
clear of all encumbrances and shall rank pari passu in all respects with the existing issued
Shares, save for any dividends, rights, allotments or any distribution, the record date of which
falls before the date of allotment and issuance of the Consideration Shares.
The Company will be making an application to the SGX-ST through its sponsor, SAC Advisors
Private Limited (formerly known as Canaccord Genuity Singapore Pte. Ltd.) (“Sponsor”), for
the listing and quotation of the Consideration Shares on the Catalist board of the SGX-ST in
due course. The Company will make the relevant announcement upon receipt of the listing and
quotation notice from the SGX-ST.
Completion of the Proposed Acquisition
Upon completion of the Proposed Acquisition, the Vendor will cease to hold any shares in the
Target and the Target will be a wholly-owned subsidiary of Corous360.
3.2
Proposed Variation
Concurrently with the SPA, the Company has entered into the Supplemental Agreement for the
Proposed Variation.
Pursuant to the Supplemental Agreement, each of the parties to the Initial SPA has agreed that
the refundable prepayment of S$18,862,500 under the Initial SPA shall be refunded to
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Corous360 in the manner set out below in the event that the Target fails to meet any of the KPIs
as set out under paragraph 3.1 of this announcement and reproduced below:
(a) audited consolidated NTA of the Target Group of at least S$2.0 million as at 31 December
2016; and
(b) one (1) million users registered with the Target’s electronic commerce platform as
determined by Corous360 by 31 December 2016.
For the avoidance of doubt, the KPIs will replace the original KPIs set out in paragraph 3.1 of
the Initial Acquisition Announcement in its entirety.
If the Target fails to meet any of the KPIs, the Vendor shall, not later than one (1) month from
the release of the audited consolidated accounts of the Target Group for FY2016, (i) refund to
Corous360 S$4,800,000 in cash; and (ii) either transfer its 1,250,000 C360 Consideration
Shares (as defined in the Initial Acquisition Announcement) to Corous360 for cancellation
through capital reduction, or transfer its 1,250,000 C360 Consideration Shares at cost to the
Company.
Save as set out above, all rights, liabilities, obligations and undertakings arising under or
pursuant to the Initial SPA shall remain in full force and effect.
3.3
Proposed Acquisition of Subsidiaries
Prior to and as a condition precedent to Completion, the Target intends to enter into agreements
with third parties to acquire 75.0% interests in PLAYe HK, a company incorporated in Hong
Kong on 10 August 2015, for a consideration of HKD75.00 (equivalent to approximately
S$15.00 based on an exchange rate of HKD5.00 to S$1.00), payable in full in cash. PLAYe HK
will be primarily engaged in the business of providing an online-mobile-offline platform for the
games and collectibles vertical.
In addition, the Target will also incorporate Play-E TW in Singapore with an issued and paid-up
share capital of S$180,000, comprising 100 ordinary shares. The Target will hold 75.0% of the
interests in Play-E TW by subscribing for 75 new ordinary shares for S$135,000. The
subscription in Play-E TW will be funded by cash. The principal business activities of Play-E
TW will be the provision of an online-mobile-offline platform for the games and collectibles
vertical. After the incorporation of Play-E TW, it is intended for Play-E TW to set up a branch
office in Taiwan.
Pursuant to the agreements to be entered into for the Proposed Acquisition of Subsidiaries, the
respective minority shareholders of PLAYe HK and Play-E TW will each irrevocably and
absolutely assign to the Target, any and all rights, including but not limited to, profit rights, voting
rights, dividend rights and other distribution rights in respect of, derived from or arising from any
and all of their respective shareholdings in PLAYe HK and Play-E TW until 31 December 2018.
PLAYe HK and Play-E TW will form part of the Target Group and will also be indirect
subsidiaries of the Company.
Based on the management accounts of PLAYe HK for the financial period ended 31 December
2015, the net asset value and net tangible asset value of PLAYe HK as at 31 December 2015
were approximately HKD1.00 (equivalent to approximately S$0.20 based on an exchange rate
of HKD5.00 to S$1.00) and negative HKD2,867,000 (equivalent to approximately S$573,400
based on an exchange rate of HKD5.00 to S$1.00) respectively.
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Based on the latest management accounts of PLAYe HK for the financial period ended 19 July
2016, the net asset value and net tangible asset value of PLAYe HK as at 19 July 2016 were
approximately HKD100.00 (equivalent to approximately S$20.00 based on an exchange rate of
HKD5.00 to S$1.00) respectively.
No independent valuation was conducted on PLAYe HK.
4.
BASES FOR THE CONSIDERATION OF THE PROPOSED TRANSACTIONS
The Consideration of S$6,287,501 for the Proposed Acquisition was determined based on
arm's length negotiations between the Company and the Vendor, and arrived at on a willing
buyer, willing seller basis, after taking into account, inter alia, (i) the Company’s economic
benefits arising from the 100% ownership of the Target and the KPIs imposed; (ii) the growth
potential of the Target; and (iii) the consideration paid by the Company for the Initial Acquisition.
The aggregate consideration of approximately S$135,015 for the Proposed Acquisition of
Subsidiaries was determined based on arm's length negotiations between the Target and the
respective third parties, and arrived at based on 75.0% of the issued and paid-up share capital
of PLAYe HK and Play-E TW respectively upon completion of the Proposed Acquisition of
Subsidiaries.
5.
RATIONALE FOR THE PROPOSED TRANSACTIONS
The Company is of the view that the Proposed Transactions are in the best interests of the
Group based on the following rationale:
(a) the acquisition of the remaining 25.0% of the issued and paid-up share capital of the Target
will allow Corous360 to reap 100% of the economic benefits and potential capital gains for
its investment in the Target; and
(b) the Proposed Acquisition of Subsidiaries will help the Target to penetrate the Hong Kong
and Taiwan markets through the Target’s retail alliance partnerships in Hong Kong and
Taiwan.
6.
RELATIVE FIGURES UNDER RULE 1006 OF THE CATALIST RULES
As the Vendor for the Proposed Acquisition is the same vendor for the Initial Acquisition, the
Company has aggregated the Initial Acquisition and the Proposed Acquisition and treated them
as if they were one transaction for the computation of the relative figures under Rule 1006 of
the Listing Manual Section B: Rules of Catalist of the SGX-ST (“Catalist Rules”).
Based on the latest announced unaudited consolidated financial statements of the Group for
the three-month financial period ended 31 March 2016 ("1Q2016") and the management
accounts of the Target for 1Q2016, the relative figures for the Initial Acquisition and the
Proposed Acquisition computed on the bases set out in Rule 1006 of the Catalist Rules are set
out in the table below.
Rule 1006(a)
Net asset value of the assets to be disposed of, compared with the
Group’s net asset value
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(S$ '000)
Not applicable
Rule 1006(b)
Net profits(1) attributable to the Target’s shares acquired by the Group
pursuant to the Initial Acquisition and the Proposed Acquisition
86
Group’s net profits(1)
(4,104)
Relative figure
(2.1%)
Rule 1006(c)
Aggregate consideration paid for the Initial Acquisition and the Proposed
Acquisition
25,150
Market capitalisation(2) of the Company as at 21 July 2016 (being the
last trading day immediately preceding the date of the SPA)
Relative figure
126,713
19.8%
Rule 1006(d)
Number of Consideration Shares (including those issued for the Initial
Acquisition) based on the Issue Price(3)
Number of Shares in the Company in issue as at the date of this
announcement
Relative figure
55,400,000
639,316,590
8.7%
Rule 1006(e)
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
Not applicable
Notes:
(1)
Under Rule 1002(3)(b) of the Catalist Rules, "net profits" means profit or loss before income tax, minority interests
and extraordinary items.
(2)
Under Rule 1002(5) of the Listing Manual, the market capitalisation of the Company is determined by multiplying
the number of shares in issue by the weighted average price of such shares transacted on the market day preceding
the date of the execution of the SPA, being 21 July 2016.
(3)
The Consideration Shares shall be satisfied through an issue of new Shares or transfer of treasury Shares to the
Vendor and/or its permitted nominee. This figure assumes that all the Consideration Shares are satisfied through
the issue of new Shares, and excludes the 1,250,000 new ordinary shares in the capital of Corous360 which were
issued to the Vendor pursuant to the Initial Acquisition.
Having regard to the above, as the relative figures computed on the bases set out in Rule 1006
of the Catalist Rules exceed 5% but do not exceed 75%, the Proposed Acquisition (aggregated
with the Initial Acquisition) constitutes a "discloseable transaction" under Rule 1010 of the
Catalist Rules.
However, pursuant to Practice Note 10(a) paragraph 11 of the Catalist Rules, tests based on
assets and profits may not give a meaningful indication of the significance of a transaction to
the issuer, in instances where, for example, the issuer is loss making. In such instance, the
Sponsor should consult the SGX-ST. As the Group is loss making for 1Q2016, the relative figure
computed based on Rule 1006(b) above may not be meaningful and accordingly, the Sponsor
will, on behalf of the Company, consult the SGX-ST on the necessity to obtain the Company’s
shareholders’ approval for the Proposed Acquisition (aggregated with the Initial Acquisition).
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The Company will update its shareholders on the outcome of the consultation with the SGX-ST
in due course.
7.
FINANCIAL EFFECTS OF THE PROPOSED ACQUISITION
The financial effects of the Proposed Acquisition are for illustration purposes only and do not
reflect the actual full financial position of the Group after completion of the Proposed Acquisition.
The financial effects of the Proposed Acquisition have been prepared based on the audited
consolidated financial statements of the Group for the financial year ended 31 December 2015
("FY2015") and assuming that (i) the Target is accounted as a 100% subsidiary of the Group
for the presentation of the consolidated financial statements of the Group; (ii) the Proposed
Acquisition of Subsidiaries has been completed prior to Completion; and (iii) the expenses
incurred in relation to the Proposed Acquisition are negligible.
For the avoidance of doubt, such pro forma financial effects do not take into account (i) any
corporate actions announced and undertaken by the Group subsequent to 1 January 2016; and
(ii) any issuance of new Shares subsequent to 1 January 2016.
7.1
NTA per Share
Assuming that the Proposed Acquisition had been completed on 31 December 2015, the effect
of the Proposed Acquisition on the Group’s NTA per Share as at 31 December 2015 would
have been:
NTA(1) of the Group (S$’000)
Number of Shares
NTA per Share (cents)
Before the
Proposed
Acquisition
After the
Proposed
Acquisition
(assuming all
the KPIs are not
met)
After the
Proposed
Acquisition
(assuming all
the KPIs are
met)
29,050
538,617,530
5.39
35,340
570,017,530
6.20
29,053
570,017,530
5.10
Note:
(1)
7.2
NTA means total assets less the sum of total liabilities, non-controlling interest and intangible assets (net of noncontrolling interest).
Earnings per Share (“EPS”)
Assuming that the Proposed Acquisition had been completed on 1 January 2015, the effect of
the Proposed Acquisition on the EPS for FY2015 would have been:
Before the
Proposed
Acquisition
After the
Proposed
Acquisition
(assuming all
the KPIs are not
met)
After the
Proposed
Acquisition
(assuming all
the KPIs are
met)
4,978
4,978
4,978
Net profits attributable to
shareholders
of
the
Company
for
FY2015
(S$’000)
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Weighted average number
of Shares
EPS (cents)
8.
460,706,294
492,106,294
492,106,294
1.08
1.01
1.01
INTERESTS OF DIRECTORS AND CONTROLLING SHAREHOLDERS
None of the Directors and their respective associates has any interest, direct or indirect, in the
Proposed Transactions (other than through their respective shareholding interests in the
Company, if any).
The Directors have not received any notification of interest in the Proposed Transactions from
any controlling shareholders of the Company and their respective associates, and are not aware
of any controlling shareholders of the Company and their respective associates which has any
interest, direct or indirect, in the Proposed Transactions (other than through their respective
shareholding interests in the Company).
9.
DIRECTORS' SERVICE CONTRACTS
No person is proposed to be appointed as a director of the Company in connection with the
Proposed Transactions. Accordingly, no service contract is proposed to be entered into
between the Company and any such person in connection with the Proposed Transactions.
10.
DOCUMENTS AVAILABLE FOR INSPECTION
The SPA and Supplemental Agreement are available for inspection during normal business
hours at the registered office of the Company at 29 Tai Seng Avenue, #05-01 Natural Cool
Lifestyle Hub, Singapore 534119 for a period of three (3) months from the date of this
announcement.
11.
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors of the Company (including those who may have delegated detailed supervision
of this announcement) collectively and individually accept full responsibility for the accuracy of
the information given in this announcement and confirm, after making all reasonable enquiries,
that to the best of their knowledge and belief, this announcement constitutes full and true
disclosure of all material facts about the Proposed Transactions, the Company and its
subsidiaries, and the Directors are not aware of any facts the omission of which would make
any statement in this announcement misleading. Where information in this announcement has
been extracted from published or otherwise publicly available sources or obtained from a
named source, the sole responsibility of the Directors has been to ensure that such information
has been accurately and correctly extracted from those sources and/or reproduced in this
announcement in its proper form and context.
12.
FURTHER ANNOUNCEMENTS
Further announcements on the Proposed Transactions will be made in due course as and when
appropriate.
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BY ORDER OF THE BOARD
DECLOUT LIMITED
Wong Kok Khun
Chairman and Group Chief Executive Officer
22 July 2016
This announcement has been prepared by the Company and its contents have been reviewed by the
Company's sponsor, SAC Advisors Private Limited (formerly known as Canaccord Genuity Singapore
Pte. Ltd.) ("Sponsor"), for compliance with the relevant rules of the Singapore Exchange Securities
Trading Limited ("SGX-ST"). The Sponsor 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 Goh Mei Xian (Tel: (65) 6532 3829) at 1 Robinson Road,
#21-02 AIA Tower, Singapore 048542.
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