Creates Synergies and Competitive Advantage for ASL’s IT Software Solution Business Mainly in Greater China
News Release – December 6, 2012
(Hong Kong, 6 December 2012) – Automated Systems Holdings Limited (“ASL” or “the Group”) (HKEx stock code: 771), a leading IT services provider in the region, announced more details in the circular filed to the Stock Exchange of Hong Kong Limited on 5 December 2012 (the “Circular”), regarding the Acquisition Announcement dated 12 November 2012 including, among other things, the details of the Acquisition, the notice of the Special General Meeting (SGM) and other information required by the Listing Rules.
Under the Acquisition Agreement, ELM Technologies Holdings Limited, a wholly owned subsidiary of ASL, has conditionally acquired Mocha Software through the purchase of the entire issued share capital of MDCL-Frontline Solutions Limited (“MDCL”) at a consideration of HK$220,000,000 from Teamsun Technology (HK) Limited (“Hong Kong Teamsun”) on 12 November 2012. The investment cost incurred by Hong Kong Teamsun in MDCL was around HK$130 million including the shareholders loan. The consideration of the Acquisition will be satisfied by ASL in cash of HK$150 million and promissory notes of $70 million. Hong Kong Teamsun is the controlling shareholder of ASL. Upon completion of the acquisition, Mocha Software will become a wholly-owned subsidiary of the Group.
Mr. Henry Hui, Chief Executive Officer of Automated Systems Holdings Limited said, “The acquisition of Mocha Software Group presents good opportunities for expansion and development of the Group in the Greater China region as we see that the overall IT service industry in Hong Kong is generally mature. It will enable ASL to expand into the fast growing software market in China by immediately strengthening our customer base in PRC and expanding the IT Software business with higher margin.”
“Mocha Software Group’s diversified range of self-developed and enterprise software products and strong research and development capabilities with over 150 R&D specialists are expected to complement and contribute to the future expansion of the Group’s IT software business. In addition, Mocha Software Group’s current quality control procedures, protocols, research and development capabilities and project management skills are expected to enhance the Group’s operational efficiency.” added Mr. Hui.
The consideration was arrived at with reference to the earnings and growth potential of Mocha Software Group. MDCL achieved a profitable track record for the past two years. Its major clients include telecom operators and state-owned enterprises in China.
Hong Kong Teamsun has guaranteed that the net profits (after tax) of Mocha Software Group for the years ending 31 December 2012 and 31 December 2013 shall at least be RMB12,000,000 (equivalent to approximately HK$14,760,000) and RMB15,000,000 (equivalent to approximately HK$18,450,000) respectively.
The anticipated growth of PRC software and IT service industry with favourable government policies was also one of the considerations. Recently, the PRC government has promulgated and implemented various policies to support the development of the electronic information industry especially the software and IT service industry. Such policies included the Planning on Adjusting and Revitalizing the Electronic Information Industry, and the Notice on Issuing Several Policies on Further Encouraging the Development of Software and Integrated Circuit Industries.
The software and IT service industry in the PRC has demonstrated a rapid development in the past several years, with an aggregate revenue generated by the software industry increased from approximately RMB757 billion in 2008 to approximately RMB1,847 billion in 2011, representing a compound annual growth rate (“CAGR”) of approximately 34.6%. According to the Twelfth Five Year Plan for the Software and IT Service Industry (軟件和信息技術服務業“十二五”發展規劃) issued by the PRC government in April 2012, the software and IT service industry is expected to achieve an aggregate revenue of RMB 4.0 trillion by 2015.
The IT solutions provided by the Mocha Software Group have won recognitions from the IT industry in the PRC, receiving several industry awards from the country’s leading organisations, including《2011中國信息產業創新突出貢獻企業獎》(2011 China IT industry — enterprise of outstanding contribution on innovation award*), and《2012年度中國行業信息化最具影響力企業獎》(2012 the most influential enterprise on China industry informatisation award*).
Looking ahead, Mocha Software Group’s broad clientele, its brand and software products are expected to enable the Group to expand its existing business into the PRC market. Similarly, the Group’s established customer network is expected to help expand the Mocha Software business into the Hong Kong and overseas market. In addition, the Acquisition is expected to diversify the activities of the Group, bringing in higher value to our shareholders.
Completion of the Acquisition is conditional upon the fulfillment of certain conditions and the approval of independent shareholders, as appropriate, at the special general meeting to be held on 21 December, 2012. Upon completion, Mocha Software’s results will be consolidated into the accounts of the Group.
For further details, please refer to the ASL’s Circular dated 5 December, 2012.
*For identification purpose only
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