Hephaestus Holdings Limited — M&A Activity 2009

Jul 24, 2009

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.

智庫媒體集團（控股）有限公司

Intelli - Media Group (Holdings) Limited

(Incorporated in Cayman Islands with limited liability)
(Stock Code: 8173)

MAJOR TRANSACTION-

DISPOSAL OF INTERESTS IN PANORAMA ENTERTAINMENT GROUP LIMITED
AND RESUMPTION OF TRADING

The Company wishes to announce that on 21 July 2009, it entered into the Sale and Purchase Agreement with the Purchaser in respect of the Disposal. The aggregate consideration for the Disposal is for a nominal price of HK$100. The Disposal constitutes a major transaction of the Company under the GEM Listing Rules.

Trading in the Shares was suspended from 9.30a.m. on 22 July 2009 pending the release of this announcement. Application has been made to the Stock Exchange for the resumption of trading in the Shares with effect from 2:30 p.m. on 24 July 2009.

THE SALE AND PURCHASE AGREEMENT

Date: 21 July 2009

Parties:

(1) Purchaser: Well Charm International Development Limited
(2) Vendor: the Company

To the best of the Directors' knowledge, information and belief having made all reasonable enquires, the Purchaser and its ultimate beneficial owners are Independent Third Parties and are also independent of Mr. Chen Wei Dong, the counterparty to the disposal of the Company's interests in the Datewell Group and CPE Program Distributions Limited as announced by the Company on 24 June 2009.

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Interests to be disposed of:

The Sale Shares, comprise 200 ordinary shares of US$1.00 each fully paid up, representing the entire issued share capital of Panorama.

The Indebtedness comprises all the amounts outstanding from the Panorama Group to the Vendor.

According to the audited financial statements of the Company, as at 31 March 2009, the Panorama Group had net liabilities of approximately HK$42,313,000.

Consideration:

The consideration paid by the Purchaser to the Vendor for the Disposal is a nominal sum of HK$100.

The Consideration was agreed between the Company and the Purchaser after arm’s length negotiations based on the net liabilities of the Panorama Group. The Directors (including independent non-executive Directors) consider that the Consideration to be fair and reasonable.

The HK$100 received by the Company will be used for its general working capital.

Conditions and completion

The sale and purchase of the Sale Shares and the Indebtedness is conditional on the satisfaction of the following matters:

(a) if required under the GEM Listing Rules, the shareholders approving the entering into and performance by the Vendor of the terms of the Sale and Purchase Agreement; and

(b) the Purchaser receiving a set of consolidated management accounts prepared in accordance with Hong Kong Generally Accepted Accounting Practice in relation to the Company and its subsidiaries made up to 31 August 2009 and in the format as set out in the Sale and Purchase Agreement.

If the Conditions have not all been fulfilled by 30 September 2009 or such later date as may be agreed in writing by the parties, the Purchaser will not be obliged to complete the sale and purchase of the Shares under the Sale and Purchase Agreement and neither of the parties will have any further rights or obligations under the Agreement.

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Completion will take place on the business day immediately following the date on which the last of the conditions set out above has been fulfilled (or such other date as the parties may agree in writing).

INFORMATION ON THE PURCHASER AND PANORAMA GROUP

The principal business activity of the Purchaser is investment holding.

Panorama is an investment holding company. The Panorama Group is principally engaged in the business of acquiring film rights, producing Chinese films and theatrical releases, distributing home video entertainment - in both video compact disc and digital video disc formats - across popular genres to East Asian and Southeast Asian markets, and sub-licensing of distribution rights.

According to the audited accounts of the Company, which have been prepared in accordance with the Hong Kong Financial Reporting Standards, for the financial year ended 31 March 2008, the audited net loss before and after tax and extraordinary item of Panorama Group was approximately HK$23,877,000 and the audited net profit before and after tax and extraordinary item for the financial year ended 31 March 2009 was approximately HK$867,000.

FINANCIAL EFFECT OF THE DISPOSAL

Upon Completion, the Group expects to recognize a gain on the Disposal of approximately HK$25,072,000 which is calculated based on the loss on assignment of the shareholder loan of approximately HK$17,241,000 to the Purchaser and the gain from cash consideration to be received for disposing of the Panorama Group at net liabilities.

Panorama Group will cease to be subsidiaries of the Company upon Completion.

REASONS FOR THE DISPOSAL

Although hundreds and thousands of movies are produced globally each year, only a small number of them account for most box office receipts. With the ongoing economic crisis, there is even fewer people flocking to the cinemas to view newly released box office hit movies, adding pressure to filmmakers' bottom line profits. It is therefore not surprising that many of Hong Kong's historical landmark theaters have closed paving way for redevelopment.

It is commonly known that most films simply do not make a full return on their investment from domestic box office revenues. Hence, most films have to rely on profits from other markets and revenue channels, such as broadcast and cable television, DVD sales and rentals, and foreign distribution.

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Although digital technology and computer generated imaging are rapidly making inroads transforming the industry and making it possible and more cost effective to distribute movies to theaters through the use of satellites or fiber-optic cable, it also gives rise to a high level of piracy. Year-on-year, the industry suffers significant losses from illegal digital downloads and on-line viewing. It is not uncommon these days to have highly advertised movies being leaked with offenders offering their review of the movie online weeks ahead of their premier release.

In view of these market developments, it has become increasingly difficult for the Group to justify further investments in a business that is no longer sustainable. Hence, the Directors have decided to dispose of its interests in the Panorama Group and focus its resources in an industry with better prospects and sustainability.

Accordingly, the Company, on 18 December 2008, acquired a majority stake in Mt. Mogan Development and Resources Corporation, a company set up for the purpose of mining the mineral resource of magnetite, a basic raw material in the production of steel. On completion of the Disposal, the Group's principal business activities will be the mining of mineral resource and the exploitation of such mineral resources. The Directors believe it is in the best interests of shareholders for the Company to focus its resources in an industry with better prospects over the short to medium term.

The Directors are of the view that the Disposal is in the interests of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATIONS FOR THE COMPANY

Based on the latest published results of the Group for the year ended 31 March 2009, certain applicable percentage ratios resulting from the Disposal exceeds 25% but is less than 75%. Accordingly, pursuant to Rule 19.06 of the GEM Listing Rules, the Disposal constitutes a major transaction.

RESUMPTION OF TRADING

Trading in the Shares was suspended from 9.30 a.m. on 22 July 2009 pending the release of this announcement. Application has been made to the Stock Exchange for the resumption of trading in the Shares with effect from 2:30 p.m. on 24 July 2009.

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DEFINITIONS

In this announcement, unless the context otherwise requires, the following words and expressions shall have the following meanings when used herein:

"Board" the board of Directors

"Company" Intelli-Media Group (Holdings) Limited, a company incorporated in the Cayman Islands with limited liability and the issued Shares of which are listed on GEM

"Completion" the completion of the Disposal

"Connected persons" has the meaning ascribed thereto in the GEM Listing Rules

"Consideration" the consideration of HK$100 payable by the Purchaser to the Company for the Disposal pursuant to the terms of the Sale and Purchase Agreement

"Panorama" Panorama Group Entertainment Limited, a company incorporated in the British Virgin Islands with limited liability

"Panorama Group" Panorama and its subsidiaries

"Director(s)" the director(s) of the Company

"Disposal" the disposal of the Sale Shares and the assignment of the rights to and interests in the Indebtedness

"GEM Listing Rules" Rules Governing the Listing of Securities on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited

"Group" the Company and its subsidiaries

"Hong Kong" Hong Kong Special Administrative Region of the PRC

"Indebtedness" the aggregate amount outstanding from Panorama to the Vendor as at the date of completion of the Disposal

"Independent Third Party(ies)" third party(ies) independent of the Company and connected persons (as defined under the GEM Listing Rules) of the Company and are not connected persons (as defined under the GEM Listing Rules) of the Company

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"PRC" the People's Republic of China, which for the purposes of this announcement excludes Hong Kong, Macau Special Administrative Region and Taiwan

"Purchaser" Well Charm International Development Limited, an Independent Third Party

"Sale and Purchase Agreement" the sale and purchase agreement dated 21 July 2009 entered into between the Purchaser and the Company in respect of the Disposal

"Sale Shares" 200 ordinary shares of US$1.00 each in the issued share capital of Panorama

"Shares" ordinary shares in the capital of the Company

"Shareholder(s)" shareholder(s) of the Company

"Stock Exchange" The Stock Exchange of Hong Kong Limited

"HK$" Hong Kong dollars, the lawful currency of Hong Kong

By order of the Board
Intelli-Media Group (Holdings) Limited
Kwong Wai Ho, Richard
Executive Director

Hong Kong, 24 July 2009

As at the date of this announcement, the Board comprises two executive Directors, Mr. Kwong Wai Ho, Richard and Mr. Wong Chung Yu Denny, one non-executive Director, Mr. Yin Mark Teh-min, and three independent non-executive Directors, Mr. Lai Kai Jin, Michael, Mr. Chan Siu Wing, Raymond, and Mr. Chu Hung Lin, Victor.

This announcement, for which the directors of the Company (the "Directors") collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief: (1) the information contained in this announcement is accurate and complete in all material respects and not misleading; (2) there are no other matters the omission of which would make any statement in this announcement misleading; and (3) all opinions expressed in this announcement have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable.

This announcement will remain on the page of "Latest Company Announcement" on the GEM website for at least 7 days from the date of its posting.

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