Richly Field China Development Limited — M&A Activity 2010

Mar 11, 2010

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.

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(Stock Code: 00176)

Website: www.irasia.com/listco/hk/upi

DISCLOSEABLE TRANSACTION ACQUISITION OF BATY INTERNATIONAL

Reference is made to the Company’s announcement dated 23 November 2009 regarding a letter of intent in connection with a proposed acquisition by the Company of the entire issued share capital of Quality Management Ltd, a UK company, trading as “Baty International”.

The Board is pleased to announce that on 10 March 2010, after close of business in Hong Kong, Bowers, a wholly-owned subsidiary of the Company, entered into an Agreement to acquire the entire issued share capital of Baty International from its sole shareholder, Mr Jackson, for an aggregate consideration of up to £930,000 (approximately HK$10.75 million), comprising a Cash Consideration at Closing of £590,000 (approximately HK$6.82 million) plus Deferred Consideration capped at £340,000 (approximately HK$3.93 million) in aggregate, payable over four years. The Acquisition closed on the same day.

The Acquisition constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules as some of the applicable percentage ratios calculated under Rule 14.07 of the Listing Rules in respect of the Acquisition are greater than 5% but all are less than 25%.

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Baty, with a 75-year history in the field, is one of the world’s leading designers and manufacturers of precision measuring instruments which includes:

• 3-dimensional, camera-based, non-contact Co-ordinate Measuring Systems

• 2-dimensional, non-contact Optical Profile Projectors

• The Harpenden Skinfold Caliper (to estimate body fat), recognised as the industry standard,

• Dial gauges and other gauging products.

Bowers, itself, is recognised as the world’s foremost bore gauge manufacturer. The Acquisition brings to the Group:

• Brand diversity. We add “Baty” dial gauges, and the “Baty” and “Shadomaster” range of non-contact optical measuring to our Metrology Division, with its existing “Bowers” brand of bore gauges and “Moore & Wright” range of micrometers and other gauges.

• Strategic positioning. While Bowers continues to lead the field in hand-held engineering measurement tools, Baty is a leader in non-contact, vision-based measurement systems, and in combination, they gain a strategic position in the market.

• • Synergies. Centralization of certain operations including procurement, manufacturing, marketing and distribution are expected to yield cost benefits to Bowers and Baty.

Reference is made to the announcement of the Company dated 23 November 2009 regarding a letter of intent in connection with a proposed acquisition by the Company of the entire issued share capital of Quality Management Ltd., a UK company, trading as “Baty International”.

The Board is pleased to announce that on 10 March 2010, after close of business in Hong Kong, Bowers entered into an Agreement to acquire the entire issued share capital of Baty International from its sole shareholder, Mr Jackson, on the terms and conditions therein.

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THE AGREEMENT

Date:

10 March 2010, United Kingdom.

Parties:

Buyer: Bowers Group plc, a UK company and a wholly-owned subsidiary of the Company.

Seller: Geoffrey D Jackson, the sole shareholder and managing director of Baty.

To the Directors’ best knowledge, information and belief, having made all reasonable enquiries, Mr Jackson is a third party independent of the Company and its connected persons (as defined in the Listing Rules).

Assets acquired

Pursuant to the Agreement, Bowers acquired the entire issued share capital of Baty International.

Consideration

The Consideration is for a maximum amount of £930,000 (approximately HK$10.75 million) in aggregate. This comprises Cash Consideration paid at Closing of £590,000 (approximately HK$6.82 million) plus Deferred Consideration in cash capped at £340,000 (approximately HK$3.93 million) in aggregate, payable over 4 years. Subject to the cap, the Deferred Consideration will be paid to the Buyer as an annual “earn-out”, being 50% of the audited profits after tax of Baty in each of the 4 financial years ending in 2013.

The Consideration was negotiated at arm’s length between the Buyer and the Seller, taking into consideration the historical financial results of Baty, its prospects, as well as the synergy and strategic value of Baty to the future growth of the Group’s Metrology/Measurement Division.

The Cash Consideration was funded by the Group’s internal resources and bank financing of the Group. The Deferred Consideration will be financed by the earnings of Baty.

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CLOSING

The closing of the Acquisition was accomplished on the same day as the Agreement was signed. Bowers Group plc currently owns the entire issued share capital of Baty, which becomes an indirect, wholly-owned subsidiary of the Company. The earnings, assets and liabilities of Baty will be consolidated with the financial statements of the Group.

INFORMATION ON BATY INTERNATIONAL

Established since 1932 in the United Kingdom, Quality Measurement Limited, better known under its trade name, “Baty International” or “Baty” for short, has over 75 years of history as one of the world’s leading designers and manufacturers of optical-based measuring instruments and gauging products. Baty’s product range includes:

• 3-dimensional, camera-based, non-contact Co-ordinate Measuring Systems

• 2-dimensional, non-contact Optical Profile Projectors

• The Harpenden Skinfold Caliper (to estimate body fat), recognised as the industry standard for many years,

• Dial gauges and other gauging products.

Baty also services and calibrates contact and non contact dimensional measuring equipment. Baty has a worldwide distribution network, and a diverse clientele. Baty products are for industrial, manufacturing and professional use, on the shop-floor, in tool rooms, and in other areas where precision measurement is critical.

In accordance with the special provisions of Part VII of the UK Companies Act 1985 relating to small companies, the annual financial statements of Baty are not required to be audited. According to the unaudited financial statements of Baty, (i) the net profits before and after taxation in the 15-month period ended 31 December 2007 (following a change in financial year end date) were both £131,947 (approximately HK$1.53 million), (ii) the net profits before and after taxation in the year ended 31 December 2008 were £124,987 (approximately HK$1.44 million) and £123,300 (approximately HK$1.43 million), respectively, and (iii) the net profits before and after taxation in the year ended 31 December 2009 were £83,946 (approximately HK$0.97 million) and £82,430 (approximately HK$0.95 million) respectively.

According to the unaudited financial statements of Baty as at 31 December 2009, its total assets amounted to £1,061,001 (approximately HK$12.26 million), and total liabilities were £284,475 (approximately HK$3.29 million), resulting in a net asset value of £776,526 (approximately HK$8.97 million),

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REASONS FOR AND BENEFITS OF THE ACQUISITION

One of the Group’s principal business divisions is the Metrology Division led by Bowers Group plc. Bowers is engaged in the design, manufacturing and distribution of precision measuring instruments for the automotive, aerospace, defence and oil and gas markets. Bowers is recognised as the world’s foremost bore gauge manufacturer, which continues to lead the field within the area of internal measurement, and expanding into external, depth and height measurement solutions.

Linking Bower’s expertise in hand-held engineering measurement equipment with Baty’s core competence in non-contact, vision-based measurement systems offers a host of potential benefits for the Group. Not least, the new technology brought by Baty will accelerate Bowers’ strategic shift from being a niche hand tool manufacturer to expansion into measurement systems, a process it has already started with the introduction of the Eseway Hardness Testers. Other benefits include:

• Brand diversity. “ Baty ” dial gauges, and the “Baty” and “ Shadomaster ” range of non-contact optical measuring, are welcome additions to the “ Bowers ” brand in bore gauges and Bowers’ “ Moore & Wright ” range of micrometers and other gauges.

• Strategic positioning. While Bowers continues to lead the field in hand-held engineering measurement tools, Baty is a leader in non-contact, vision-based measurement systems and, in combination, they gain a strategic position in the market.

• Synergies. Centralization of certain operations including procurement, manufacturing, marketing and distribution are expected to yield cost benefits to Bowers and Baty.

In light of the foregoing, the Directors consider that the Agreement is on normal commercial terms, the terms of the Acquisition are fair and reasonable and in the interests of the Group and Shareholders as a whole.

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INFORMATION ON THE UPI GROUP

The Company is a diversified holding company. Its principal subsidiaries are engaged in a diverse range of business operations as follows:

• Contract Manufacturing Division This division is principally engaged in the design, production and sale of electronic and electrical components products.

• Tools Division This division procures, manufactures, distributes and sells hand hacksaws, hacksaw blades, hacksaw frames, builders’ tools, riveter guns, wood saws and lawn, garden and agricultural tools.

• Metrology Division This division, led by Bowers Group plc, is engaged in the design, manufacture and distribution of precision measuring instruments for the automotive, aerospace, defence, and oil and gas markets.

• Magnetics Division This division has a rich history of leading edge innovation in magnetic tool technology. Its key products are permanent magnets (cast alloy), magnetic tools, magnetic chucks and turnkey magnetic systems for removal of ferrous particles by separation (in a solid medium) and filtration (in a liquid medium).

• Consumer Electronics Division This division is an ODM and OBM manufacturer of consumer durable products including noise cancellation headphones and hearing aids with a single chip solution.

• Leadframe Division This division designs, services and produces customised high-precision stamped, etched and electro-plated integrated circuit leadframes for the semi-conductor industry.

LISTINGS RULES IMPLICATION

The Acquisition constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules as some of the applicable percentage ratios calculated under Rule 14.07 of the Listing Rules in respect of the Acquisition are greater than 5% but less than 25%. There is no prior transaction which is required to be aggregated with this Acquisition under Rule 14.22 of the Listing Rules.

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DEFINITIONS

In this announcement, unless the context otherwise requires, the following terms bear the following meanings:

• “Acquisition”

• the acquisition of the entire issued share capital of Baty by Bowers under the Agreement

• “Agreement”

• the agreement dated 10 March 2010 entered into between Bowers and Mr Jackson in respect of the Acquisition

• “Associates” has the meaning ascribed thereto in the Listing Rules

• “Baty” or “Baty International”

• Quality Measurement Limited, a company incorporated in the United Kingdom and wholly-owned by Mr Jackson

• “Board” the board of Directors of the Company for the time being

• “Bowers” or “Bowers Bowers Group plc, a company incorporated in the Metrology” United Kingdom and a wholly-owned subsidiary of the Company, together with its subsidiaries and affiliates

• “Cash Consideration”

• the cash payment of £590,000 (approximately HK$6.82 million) payable at Closing

• “Closing”

• the closing of the Acquisition accomplished on the same day as the Agreement

• “Company”

• United Pacific Industries Limited, a company incorporated in Bermuda with limited liability and the shares of which are listed on the Main Board of the Stock Exchange (Stock Code: 176)

• “Consideration”

• the consideration of up to £930,000 (approximately HK$10.75 million), comprising the Cash Consideration and the Deferred Consideration

• “Deferred Consideration”

• up to £340,000 (approximately HK$3.93 million) in aggregate to be paid as an annual “earn-out”, being 50% of the audited profits after tax of Baty in each of the 4 years ending in 2013

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“Directors” the directors of the Company for the time being “Group” the Company and its subsidiaries “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange

“Mr Jackson” Mr Geoffrey D Jackson, the sole shareholder of QML before the Closing

• “QML” Quality Measurement Limited, a company incorporated in the United Kingdom with limited liability, trading as “Baty International” or “Baty”

• “Shareholders” shareholders of the Company

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

• “Seller” Mr Geoffrey D Jackson

• “HK$” Hong Kong dollar(s), the lawful currency of Hong Kong

• “£” Pound sterling, the lawful currency of the United Kingdom

By Order of the Board United Pacific Industries Limited BRIAN C BEAZER Executive Chairman

Hong Kong, 11 March 2010

As at the date of this announcement, the executive Directors are: Mr Brian C Beazer, Mr David H Clarke, Mr Simon N Hsu, and Mr Patrick J Dyson; the non-executive Director is: Mr Teo Ek Tor; and the independent non-executive Directors are: Dr Wong Ho Ching, Chris, Mr Henry W Lim, Mr Ramon S Pascual and Mr Robert B Machinist.

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